The year 2023 presents both challenges and opportunities for the accounts payable. It is crucial for financial executives to attain the necessary insights into the evolving landscape of AP. This understanding will form the bedrock for optimal decision-making throughout the upcoming three quarters and beyond.
Top Accounts Payable Trends in 2023
It is essential for AP practitioners to possess a comprehensive understanding of four significant trends that surfaced in 2022 and continue to shape the landscape in 2023. Grasping these trends holds paramount importance for not only organizations but also finance and AP teams. This comprehension enables effective positioning and sets the stage for a prosperous year ahead.
Trend #1: Economic Uncertainty
The momentum of economic challenges observed in 2022 has persisted into 2023, with uncertainties surrounding the direction of the economy. This uncertainty has cast its shadow on business operations across diverse industries. The convergence of factors like significant inflation, escalating interest rates, workforce shortages, and downsizing has created a situation of concern for many prominent enterprises. Consequently, businesses are grappling with elevated expenditures and more stringent financial constraints, leading to amplified pressures on wages, sales, and overall revenue. This impact is also felt by AP professionals. However, it’s important to note that this situation doesn’t necessarily indicate a bleak outlook.
Trend #2: Increased Focus on AP Data
A considerable portion of Accounts Payable professionals are progressively directing their attention towards AP data. The visibility into Accounts Payable data has transitioned from being merely desirable to an absolute necessity, emerging as a vital dataset for shaping financial strategies.
In anticipation of an impending economic downturn, the management of cash flow has risen to the forefront of organizational priorities. Correspondingly, the significance of Accounts payable within the realm of finance is experiencing a parallel escalation. By furnishing timely and precise insights for cash management, Accounts Payable data wields a substantial influence on how businesses oversee cash flow dynamics and cultivate vendor relationships.
However, achieving this effectively hinges upon the quality of data. Experian’s revelation that 55% of business leaders lack complete confidence in their data underscores the need for concerted efforts. The heightened uncertainty in the economic landscape magnifies the significance of every business decision, and the bedrock of sound decision-making lies in data reliability. A precise representation of inflows and outflows of cash is an indisputable imperative.
Trend #3: The Continued Rise of Flexible Work
The year 2020 compelled the adoption of remote work setups, which persisted as a defining feature throughout 2022. Despite the issuance of numerous back-to-office directives across various industries, it’s evident that the era of flexible work environments is firmly established. Remote work has transitioned from a preference to a priority for employees, often being expected or even demanded as a part of their employment benefits.
According to McKinsey, 58% of the workforce possesses the capability to function entirely remotely or in a hybrid manner. Furthermore, a significant 65% of employed individuals express a preference for remote work if given the choice. In light of this, AP teams must be strategically poised to accommodate both remote and hybrid work arrangements. Entities relying heavily on paper-based procedures and approvals will encounter heightened difficulties if they fail to adapt to the evolving landscape, potentially impeding their talent acquisition and retention efforts.
The strategic and proactive management of processes by companies is of utmost importance. Entities that hinge their strategies on a complete return to full-time office work continue to grapple with the prevailing and ever-expanding trend of remote work.
Trend #4: Embracing Automation
Small and medium businesses (SMBs) are wholeheartedly embracing the potential of automation and recognizing its transformative capabilities. With the proactive goal of sidestepping potential setbacks, SMBs are taking decisive steps to uphold their competitiveness in our rapidly evolving environment.
Navigating growth during challenging periods presents its own set of difficulties, often resulting in an increased workload distributed among teams of similar sizes. The pursuit of achieving more with fewer resources becomes an impractical endeavor. Simultaneously, business leaders find themselves in need of accurate real-time insights but are hindered by the reliance on manual Accounts Payable processes.
Historically, significant enterprises have led the way in adopting automation and digital transformations within their back-office operations. However, the landscape is evolving, and a growing number of SMBs are now harnessing these very tools and processes to drive their own metamorphosis. Remarkably, as much as 70% of SMBs have observed heightened productivity levels thanks to automation integration.
Future Predictions for Accounts Payable
With finance and Accounts payable assuming an increasingly vital role in corporate governance, the path ahead holds both challenges and opportunities. The outcomes following economic downturns are intrinsically tied to the strategic positioning adopted before confronting adversity. To thrive in the year 2023, enterprises must contemplate strategies that bolster their adaptability and operational efficiency.
AP experts should remain mindful of the forthcoming dynamics of this year, positioning themselves advantageously to not only endure but prosper. The proactive embrace of automation today could avert substantial difficulties in the future. Relatively modest investments might yield substantial returns when they matter most. Notably, businesses should ensure that if the need for cost reduction arises, the cuts are made judiciously.
Embracing these four predictions stands as the preliminary stride toward readying against unfavorable financial scenarios. Equally crucially, they serve as the linchpin for devising strategies to gain or regain a competitive edge over rivals.
Prediction #1: Recession Ahead
According to KPMG’s Q3 2022 CEO survey, 86% of CEOs anticipated a recession within a year. Mounting pressures from elevated raw material and labor expenses, coupled with rising company prices and abrupt interest rate hikes, create an unfavorable economic landscape.
In response, organizations are halting or postponing major projects due to escalating uncertainty, resulting in broader market slowdown and anticipated negative growth. Technology and banking sectors have already seen layoffs, while labor shortages in other fields mitigate some impact.
Finance leaders must collaborate with peers to assess business health, establish robust data and performance tracking, and influence stakeholders strategically. Those taking such proactive steps during the recession should emerge stronger post-downturn.
Prediction #2: Customer-Centric Companies to Flourish
During economic downturns, businesses often lose sight of their pivotal driver for success: the customer. While it’s imperative for SMBs to navigate recessions with resilience, emerging stronger on the other side is equally, if not more, crucial.
An effective strategy involves an unwavering customer focus. Prioritizing exceptional customer service positions businesses to seize and sustain revenue-generating operations. To achieve this, organizations must ensure continuous value delivery across the customer journey, integrating systems and processes in alignment with this ethos.
This dedication to customer success extends beyond human interactions to encompass tools and tracking performance. Monitoring support tickets forms an integral part of the customer journey. The pursuit of customer-centricity is an ongoing objective, requiring perpetual investments for continual enhancement.
Prediction #3: Recession Anticipated to Conclude by Q3 2023
Based on KPMG’s surveyed leaders, 58% express confidence in a mild and brief anticipated recession. While 71% foresee an earnings impact of up to 10%, 76% have already taken precautionary measures. These responses reflect a prevailing belief in businesses’ resilience to weather the downturn.
Although the trajectory of interest rates may continue upward, the rate’s swift ascent makes this outcome less probable. Enhanced stability is expected to embolden companies to reinvest, initiate or resume projects, and expand hiring efforts. This rebound will likely manifest prominently in industries that underwent substantial downsizing.
Initial growth indicators often appear subtle. Amidst the recession, businesses must strategically invest in areas that bolster their resilience, such as harnessing the potential of automation. Automation empowers teams and enterprises to uphold efficiency even amid cost constraints or scaling back.
Prediction #4: AP to Propel Financial Professionals’ Careers
For aspiring Accounts Payable professionals, this year holds promising career advancement prospects. Despite misconceptions about AP’s transactional nature, its strategic value through data often remains overlooked. As highlighted, the significance of accurate and timely AP data continues to escalate, benefiting both finance teams and the holistic assessment of companies’ financial well-being.
Leveraging tools like Serina, the role of Accounts Payable is poised for increased prominence. More companies are recognizing AP as a pivotal stepping stone for the growth of financial professionals’ careers within their ranks. As businesses intensify their focus on cost scrutiny, management, and efficiency enhancement, Accounts Payable automation emerges as a key catalyst.
AP automation achieves the following critical objectives:
- Centralizes data
- Ensures bill precision
- Sustains invoice and contractual commitments
- Facilitates cash flow management and control
These attributes are pivotal considerations, granting companies more bandwidth to concentrate on strategic initiatives instead of being bogged down by time-consuming intricacies.
Streamline Processes, Cut Costs, & Mitigate Risk with AP Automation
Serina stands as a vital comprehensive solution for accounting teams across the globe. Our platform optimizes efficiency and output for busy AP teams. Serina supports numerous customers worldwide on their journey to establish meaningful, personalized relationships and attain excellence in customer experience.
