Staffing challenges, the growth in digital payments and B2B payments were among the stories that defined 2021 in payments and Fintech, MineralTree president Vijay Ramnathan said recently.
MineralTree conducted some research in 2020 with mid-market and enterprise finance teams, Ramnathan said. Prior to the pandemic, 85 per cent reported working fully in the office. During the pandemic, however, that number shrunk to 22 per cent. Over the summer it returned to north of 60 per cent.
Come the summer of 2022 and beyond, roughly half of those surveyed expect to be working remotely or in some sort of hybrid situation, meaning 2021’s challenges are not disappearing any time soon.
“Enabling a remote workforce, improving cash management, and ensuring business continuity are all critical and finance leaders are prioritizing the digitization and automation of back-office financial processes to get there,” Ramnathan said. “That will continue in 2022.”
Close to 60 per cent of surveyed finance leaders said the strategic importance of their supplier relationships grew in 2021, with that rate even higher in sectors such as healthcare where the steady flow of supplies is essential to delivering critical services. Because accurate and timely payments are key to those relationships, suppliers will have more say in how they get paid as organizations focus on keeping their businesses moving forward and preventing future supply chain vulnerability.
It is no surprise businesses want to embrace electronic payment methods, Ramnathan said. They are faster, simpler, and cheaper for all involved.
Yet despite these truths, adoption has stalled for three reasons, with the first being a team’s capacity to contact and onboard vendors to accept digital payments. Ramnathan said that impediments can be addressed by AP solution vendors that offer services to continuously onboard suppliers to accept digital payments.
The second issue is giving suppliers a choice in how they get paid. Both sides need to see benefits, Ramnathan said.
Suppliers must have the capacity to manage the payment information for multiple customers in one location.
“Supplier portals can address this need while also providing suppliers with a consolidated view of their accounts receivables along with valuable analytics on things like efficiency, DSO and credits outstanding,” he explained.
The Great Resignation, one of the biggest stories of the year, has accelerated automation, Ramnathan said. People across industries and levels have abandoned their pre-pandemic roles to do other things or simply nothing at all.
That leaves businesses in a pickle, so it will lead to increased investment in automation so they have safeguards in place.
“Manual, paper-based processes in finance, accounting, human resources (ironically), and customer service will be prime targets as businesses look to fill in for hard-to-find talent, and expand on existing, digital transformation initiatives,” Ramnathan said.
In concert with that increased automation, look for accounts payable to become a data hub that helps improve business processes throughout organizations, Ramnathan said. That increased automation will generate reams of data that can help further accelerate digital efforts, while learning which payment methods cause the most or least problems with suppliers; forecasting spending and cash flow more accurately; analyzing payments and receivables to free up cash flow; identifying payment frictions in different parts of the business; and predicting potential fraud based on common characteristics.
“Managed properly, AP data will provide a ‘single version of the truth’ about these aspects of the business, enabling more confident strategic decision-making, improved operational control, and a better understanding of customer and supplier needs,” Ramnathan concluded.