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Empower your AP automation with strategic intelligence
Thank you, everyone, for joining. We're excited to be here with you today. Anne, thank you also for joining me to talk about AP automation, some of the challenges that we're seeing in the marketplace, what it might look like to chart that ideal path, if you will, towards the holy grail of AP automation, and some key considerations that folks that we've been speaking with are looking at, key considerations that we think are important that we're seeing in the marketplace.
So before we dive into that, Anne, just to bring some lightness to what's been a very stressful year, with this pandemic and being cooped up in our houses and whatnot, we've seen cartoons-- I love cartoons. It's such a great way to lighten things up.
One of my favorites was this proverbial wrecking ball with COVID on it swinging outside of a building and about to swing in. And inside, it looks like a group of treasury professionals, and they're sitting around the table, and there's a little comment box above that's basically someone sharing, you know, I really don't see why we would need to prioritize a digital transformation at this time.
And no one could have known, right? That black swan event was just around the corner. And fair enough, here we are. And we're picking up the pieces. We're compensating. We're dealing. And we're doing the best we can. You've seen and shared a couple of funny ones with me as well. What have you seen, or what are some of the things that you think about that keep this whole stress of the pandemic a little bit lighter as we operate?
I think my favorite is a survey that said, what drove your digital transformation in 2020? Fraud, productivity, better visibility, or COVID-19. I think we all know that COVID-19 drove the show in 2020 and caused I think what was existing problems to be exacerbated, without question.
Absolutely. Absolutely. So as we look at the content we want to cover today, why don't we dive into some of the challenges, key areas where we've really seen those headwinds or that perfect storm? And to kick things off, one of the ones that I've seen consistently across the board relates to business continuity and just this ability to operate remotely.
And if you look at the variables or the aspects of AP automation and how those have been impacted, let's say, on the front end from the classic kind of invoice to pay, if you will, we've seen everything from paper invoices come into businesses where they're not there to pick them up. And so they're not paying their vendors on time.
In other cases, it's maybe they're getting a PDF of the information, but capturing that information, and getting it in the system, and moving it through the pipe for approval-- so in some cases, there's additional needs for things like geo-coding, and just approvals across the board, and getting that invoice through the organization.
From a payments perspective, similar. One of the biggest challenges that we've seen is related to in-house checks. A lot of organizations were still leaning on printers in house printing those checks and managing that process. And with the inability to get into the office, that shut down. And this is a big one, I know, at a product organization that you're helping run. What have you seen? What are maybe some of the numbers, or stories, or examples of companies that have shifted quickly from that in-house check grant towards either an outsourced check grant or, ideally, towards an electronic form of payment?
Yeah, Bryan. We saw a lot of customers struggling with maintaining in-house printing checks and getting those out the door in a timely manner with lockdowns and all the challenges associated with that. And seeing them pivot to outsourcing checks to keep the wheels going. But even with that, customers who are already outsourcing their check prints ran into trouble with their end-to-end process. It just didn't hold up in the pandemic.
For example, we worked with a customer who sent about half a million checks annually in the education space, but they found that the institutions that they were mailing checks to were closed and they couldn't get the signature receipt they needed for their procedure.
And so they pivoted to ACH much faster than they ever thought they could. So we've seen a lot of movement within the payment space to digitize, right, because of necessity accelerating those plans. That was something that we saw a lot with customers.
That's a large volume of checks. We've certainly had those conversations, and we've had similar conversations with some of the smaller companies. Maybe they were just doing 1,000 checks a month. Nonetheless, the challenge is the same, right-- the inability to get in the office, that need to move quickly towards a remote check print capability and/or some sort of support to help migrate what is really a paper process more towards an electronic process.
From a visibility perspective, that's another key area, Anne, that we saw a lot of challenges in. So not only are they not getting into the office to, let's say, see the invoice, but where are we in any of those particular steps in the process?
So visibility is huge with organizations that are centralized or decentralized. This, again, becomes a huge challenge with respect to AP automation. Or I don't know, for you, it's one that we've talked about, and I know sometimes I've seen a beautiful cat walk by or one of the kids kind of stepped in.
This whole concept of doing more with less and we're working from our homes, what are you dealing with in your world, Anne? And what are some of the clients you're working with seeing these days?
Yeah. I mean, I think there's different companies that are dealing with layoffs, right, and they've got to pick up more than they were doing before. And for me, I've got three small kids that are online learning in not a huge house. And so I get a lot of, mom, my Wi-Fi's frozen, mom, I need lunch.
And so you're getting pulled in more directions than you ever thought possible, right? So that absolutely does not help productivity. But it's what we're all dealing with, right? Animals walking across our keyboards, our dogs barking in the background. It's just the reality of how we're operating in the pandemic.
And the other interesting piece, I think, that's a problem and a threat is fraud. We've seen it's always been a problem, but it's on the rise, without question, in COVID for a couple of reasons. At the end of last year, 43% of the business email compromise loss reported was tied to vendors and paying invoices. You see the email compromise where you think your vendor's redirecting you to pay a different account or all the payments to a different account when, in fact, it's a fraudster. So that is on the rise and a definite weakness that needs to be addressed.
But the other interesting piece is with pandemics come innovation. So there's a lot of new business startups spinning to serve the new, changing environment. And what we're seeing is an increase in synthetic businesses, meaning they're trying to take bits of stolen information and create a very legitimate-looking front on social media, through credit-reporting agencies. And it's something that we really have to continue to look out for, and poses a huge challenge for all of us.
And I'm glad you brought that one up. That's probably a a number one priority. Certainly, the productivity side is extremely important, but when money is going out the door and it shouldn't be going out the door, that's a big problem. So we've heard from different clients in the tune of hundreds of thousands of dollars, potentially, of fraud that's happened or that has been an attempted fraud. So I'm really glad you brought that one up. We'll talk more about that one, actually, here in a few minutes. To your point, there's some great technologies out there to help organizations really help mitigate that fraud.
Shifting gears a bit. So we talked about some of the classic challenges that we're seeing. Looking at one of the recent analyst reports from, I believe it was Strategic Treasurer-- they have noted that around 62% of treasury professionals polled prioritize productivity and efficiency first and foremost. Second, at 18%, was cost saving.
So 80% of treasury professionals were focused really around driving efficiencies and productivity and reducing cost. So fraud is a critical component. Absolutely, right? Top of mind. It's the hull of the boat that you've got to pay attention to, or it can sink your boat quickly. But these other parts are critically important as well.
With respect to driving efficiency and looking at some of the ways that we're going to get towards the nirvana or the holy grail, if you will, maybe I'll touch on a couple, Anne, and you can think of a couple here as well.
So one is digitizing and automating. So this taking any paper or manual process, step one, is to digitize it. And we've seen that in the form of leveraging things like [INAUDIBLE], optical character recognition, pulling information off of invoice. A step forward even from that is data-line extract and, more precisely, of pulling information off of invoices, be it paper or even off of the PDF if organizations are receiving them electronically.
And then helping to further move that through the organization, really taking advantage of the next step of automation, right? So consider that paper shuffle-- somebody taking a piece of paper across the room, putting it together, let's say, for two- or three-way matching, bringing together the PO, and the invoice, and the received goods. To leverage technology to help support that process and to really automate it as much as possible with certain tolerances or dials, if you will, to-- let's say certain ones move through the system and others kind of pop up more for a check.
Similar for payment. So moving away from one form of payment-- let's say checks-- moving more towards supporting all the different payment types. But more importantly, ideally, prioritizing some of those towards, let's say, card to drive rebate and reduce cost. I'm going pause there, Anne. And what are your thoughts with respect-- and what you're seeing from digitizing and automating, what else are you seeing out there that organizations are doing to really chart that course towards calmer seas?
Well, I think it's about simplicity, right? How do you drive out, and work with the multiple systems, and get many files into one for your payments? To your point, the rebate to make yourself more profitable. And how do you digitize those payments and have some good remittance coming in electronically on your side and on the payer's side? You want to make sure that they've got all the information they need for your suppliers, so they're not calling you, asking you a question-- where's my payment, I need this piece of information and that piece of information.
The other thing, I think, is storing your vendor information. How do you do that? What are the things you can do? Can you even outsource that so that you're no longer holding that sensitive data and putting that at risk, from a fraud perspective?
Love it. That's a great one. Being able to push the sensitive vendor details, payment details off to, let's say, your banking banking program, letting them store or protect that information, and really taking the organization out of it for liability and helping to mitigate the risk.
And also, to your point, the account validation piece was a huge component of what we were seeing help solve for the fraud.
With respect to the different payment times, there's the classic B2B payments, and then there's some of the newer technologies like Real-Time Payments, or RTPs, which is becoming more and more present as we move towards around what we're hearing should be around a 90%, 92% ubiquity by end of the year. So we'll probably see a lot more adoption of that payment type.
We've talked a little bit about cards and, of course, [INAUDIBLE] check, DCH payments. One thing we haven't talked about is the consumer payment. This is hugely on the rise. And I think, Anne, you've even seen some recent statistics around business-consumer payments and the importance of those for AP professionals to be thinking about as they build out their AP automation structure. Can you share some stats on that front?
Yeah. In a recent survey of banks, 72% said that their customers are asking for B2C automation. There's Zelle, RTP, Venmo, PayPal. All of those channels are growing in popularity. As a matter of fact, I just saw a stat from Zelle come out today for the end of 2020 at $307 billion payments, which is a 58% increase in transactions over 2019. So that's definitely an important piece of your partner's roadmap. How are they innovating in that space? And do they meet your needs?
Wow. That's an impressive number-- over $300 billion in Zelle payments. And I'm going to be interested to see if we can start to tease out or have Zelle share more information with the treasurer community to get a sense for maybe how we're starting to see more business-to-consumer payments. What percentage of those are starting to migrate a little bit more towards business and consumer? Because really, that network started out more as a B2B, person-to-person network. So it's fascinating how quickly that network has taken off.
So we talked about digitizing and automating, mitigating fraud, optimizing payments. And also, the other key piece is tying all this information together and enabling that to flow back and forth between the ERP system. So ideally, generating one file, these are the payments I need to make, having that reconciliation commission come back, the remittance data, everything come back into the organization, so that we can help complete the reconcilement process.
So we're seeing a lot of organizations take advantage of making partnerships as well as fintechs to help facilitate that integration back to the ERP. There's a lot of great APIs that have been built out and/or, let's say, plug-ins or connectors that are helping really take what was previously a couple, few months process, easily, from an ERP integration standpoint, and really driven that down to weeks, with minimal time, frankly, on the client side of integrating payment systems and then invoice automation systems back to the ERP.
So with that being said, I'm going to shift gears a bit. Let's talk about some of the best practices. What are some of the key questions, considerations that folks should be thinking about as they move forward in their digital transformation? So we're all at different spots. Some of us are a little bit further back. Some of us more on the bleeding edge of technology.
And one of the areas that is near and dear to my heart is partnership. I think it's one of the best ways for us to focus on our core competency and work with a trusted partner to make things happen that really help us focus on our business. And so one of those is, as we look to partnerships, I would recommend one of the key considerations here is making sure that they're financially stable.
I mean, these have been turbulent, up-and-down times. If they're proven, experienced, if it's an AP automation platform, things like having a network. Being able to take advantage of a Day 1 lift maybe hundreds of thousands of vendors in their network. And then the next piece beyond quantity is the quality of that network. How well does that network overlap with your vendor base? So those are some key considerations and questions to be thinking about.
And then also, the payment types, right? So the B2B. But also, are the partners able to offer that, let's say, business-to-consumer payment functionality? And do they have a way to help support, let's say, driving payments towards a rebate option to, again, help reduce your costs, like we talked about as a key priority, and push rebate back into the organization? So that's partnerships and vendor networks.
Anne, curious, your thoughts with respect to things like the ease of integration or just flexibility. How important is that? And what things should organizations be thinking about and considering with respect to integration and flexibility?
Yeah. I think more plug and play, and how do you integrate and let your partners do the heavy lifting? And as you look at fraud, how do you think about strengthening your armor? So you've got different account validation services out there that can protect that vendor network base. Make sure you know who you're paying.
But there's ways to increase that through digital footprint, through behavior analytics, looking at IP addresses, cookies, digital footprints. That's a way to strengthen your overall protection of your end-to-end process.
And then I would say, really, in the end, innovating and flexibility. Is your partner investing in technology? Are they looking at automating B2C? What is available for you? So we can't just be standing still. And they should be able to meet you where you're at in your roadmap. We saw 2020 as a very reactionary year. Some people accelerated, some people battened down their hatches and rode the storm out. But in the end, you've got to have a partner who meets you where you're at, whether you're going to do part of the journey or all of the journey.
Yeah. I love that. It is critically important to find partners that aren't trying to force you down a path that doesn't feel right or that's uncomfortable, that they're able to meet you where you are and provide solutions that support you on the journey where you are on that journey. So that's a great point, Anne. Thank you.
So given the time, I just wanted to quickly say "thank you" to everyone for joining us today. We hope that you found this very helpful. Next month in March, we'll be conducting another webcast focused on US banks, AP optimization solutions for us. That's called AP Optimizer. So we look forward to sharing more with you on that, some of the key differentiators, and ways that we really think that it's a best-in-class class solution. And we've been able to help a number of clients on that front. So again, thank you for joining us today.
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