Turn On Automation Image by Gerd Altmann from PixabayTipalti has identified that 78% of finance leaders from the US, the UK and Benelux believe sustainable growth is more important than growth-at-any-cost. This affirms previous research in 2021 that placed the environment and sustainability as an area in which CFOs felt they most wanted to develop their knowledge.

This shift in thinking indicates that CFOs are looking more to the long term as they face the, hopefully, short-term inflation challenges and a turbulent economic climate. In the UK, inflation dipped slightly in April but is still at 7.8%. After reaching a high of just over 9% in the US in June 2022, it has fallen to 4.93%. In the Netherlands, inflation rose to 8.8% in the year’s first quarter.

The recent inflation has increased expenses and supplier costs, increasing business pressures. However, 78% believe that automation of their accounts payable (AP) function can help to offset some of these rising costs. The reason behind this hypothesis is that respondents said that finance teams are still spending 36% of their time on manual processes.

There are two lines of research here, the short-term challenge of cost inflation and the longer-term challenge of sustainable growth. Tipalti believes that AP automation offers a solution to both. At the same time, CFOs are caught between a focus on their original growth plans (51%) and delivering more sustainable growth (45%). Should they be? Can AP automation achieve both aims?

Rob Israch, President, Tipalti
Rob Israch, President, Tipalti

Rob Israch, President of Tipalti, commented, “Two years ago ‘growth-at-any-cost’ was considered successful and the reason why valuations skyrocketed, making it easier than ever to grow a startup. Falling from their pandemic peak, the collapse of Silicon Valley Bank followed by other regional banks sent shockwaves throughout the finance sector, impacting liquidity in the tech space, meaning many are now faced with a very different reality.”

AP Automation brings hope

A recession is still likely to occur, YCHARTS estimates that the probability of a recession has risen to 68.22% for April 2024. However, according to Tipalti’s research, businesses are planning for growth beyond the economic downturn. 77% believe they need to stop being reactive and plan for what happens beyond the downturn. Automation of current processes is therefore critical, as it frees up time to spend on strategic thinking and potentially removes labour costs in the short term and as growth returns, it enables an organisation to scale faster.

79% of respondents see AP automation as providing three key benefits that go beyond the short term, offering longer-term support by :

  • Freeing up time for strategic activity (83%)
  • Enabling timely supplier invoice payments, thereby improving cash flow (84%)
  • Reduce friction and complexity to ease business expansion (80%)

Israch added, “Sustainable growth needs to be strategic and measured. Successful businesses will be focusing on their core proposition and doubling down on the segments of the business with the best productivity and economics – essentially those that provide the best ROI and attractive payback for sustainable growth. To be future fit, businesses must ensure their finance team is agile and equipped with the tools, such as automation, to withstand change.”

Is the change happening or not?

This is a good question based on the information provided by Tipalti. Tipalti argues that there is progress towards AP automation, but there is a long way to go. It notes that the time to process a purchase invoice has fallen from 50 minutes in 2021 to 33 minutes in 2023. However, it flags that this fall results from increasing supplier invoices and the same or fewer resources to process them. If that is the case, then it argues that these shortcuts risk an increase in errors and an increased risk of burnout of AP staff.

However, it has not allowed for any increase in automation that might have impacted the decrease in average time. Its argument rests on research that indicates that 32% say AP will not be fully automated until 2024. A further 31% won’t have fully automated until 2025. However, even partial automation will have already improved the time taken, and if the remainder (37%) have fully automated, the drop from 50 to 33 minutes is only a 31.5% reduction.

Arguably Tipalti has chosen to wield the stick, urging businesses to implement automation. However, the carrot may be more effective in this case. The truth probably lies somewhere between the two. Deeper research and better questions may have uncovered a more accurate answer.

However, poor AP automation does have an impact beyond the finance team. With supply chain resilience critical, it is not surprising that 81% of respondents noted, they need to ensure supplier relationships are as good as possible. Inefficient AP processes can lead to:

  • damage to supplier relationships (34%)
  • an inability to find enough time to contribute to strategic decision-making (33%)
  • a weakening negotiating position with suppliers (31%)

Enterprise Times: What does this mean

Analysis of the data provided by Tipalti can vary. Unfortunately, unlike the report in 2021, Tipalti did not provide a full report with all the data included. This may follow and may shed more light on what the results achieved. The study was based on 500 US, UK, Netherlands and Belgium finance and AP leaders. The interviews appear to be quantitative rather than qualitative. Qualitative interviews might have delivered a deeper understanding.

The consequences of automating the accounts payable function are positive. Whether for short-term or long-term sustainable growth, the advantages of leveraging tools such as those Tipalti provide are clear. The results are not surprisingly positive for Tipalti as it looks to grow its market share further. They provide information that newly appointed CMO Des Cahill will no doubt leverage in the coming weeks, with funds available for expansion as well.


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