At Tungsten Network, we understand our responsibility to remain attentive to the world around us. This includes helping our customers understand how current news and events affect the AP industry, and how to effectively plan for the future.
In January 2022, we sponsored a whitepaper by Ardent Partners called ‘AP 2022: Big Trends and Predictions’ which looked at the current drivers across the AP industry and a forecast for the year ahead. In this blog, we’re taking a look back at these predictions to provide updates on where things stand in 2023, and what we could expect this year.
It’s worth remembering that in January, there was still a lot of focus on managing the lingering pandemic and adjusting to the ‘new normal’. A switch to remote working had accelerated the need for digitisation across AP functions. So, it’s no surprise that predictions for the year included hybrid working, AP automation, AI advancements, flexible staffing models, and more.
To see the 2022 paper, which we’ll be referring to throughout, you can download it here.
#1: The Hybrid Workforce becomes the Standard
When much of the world was still in the backend of the pandemic, a key prediction was the continuation of hybrid working models across AP functions. Research by Ardent Partners found that 90% of executives expected more of their employees to be operating in a remote environment this year.
Remote and hybrid working models remained popular in 2022, with 56% of companies offering some level of remote working. However, this year has also seen the work-from-home movement encounter a few challenges, and we may see a dip in 2023.
As the world moves into a cost-of-living crisis, experiencing inflation and rising energy costs, many remote or hybrid workers may choose to go back into the office to save money on gas and electric bills. There’s also an increasing number of remote workers feeling a sense of loneliness and isolation, as 67% of workers aged 18-34 admitted that, they have found it harder to make friends and maintain relationships with colleagues since working from home.
Some companies, such as Meta, are also deciding to scrap some office locations as hybrid work models fail to work financially. Will other companies do the same?
Prediction #2: AP Managers Will Develop New, Flexible Staffing Models
As covid pushed the boundaries on flexible working, it was predicted that companies would continue to develop new, agile working models to keep up with employee demand. The relationship between employer and employee has been changing over the last decade or two, and hiring managers would have to rethink their traditional staffing and hiring strategies to prepare for the ‘Future of Work’.
Flexibility in the workplace has continued its upward trajectory and companies globally have started adopting a 4-day work week. In fact, 34% of organisations think the four-day working week will become a reality for most UK workers within the next 10 years.
It’s now almost a prerequisite for employers to offer some level of flexible working. As the war for talent continues, companies that don’t offer versatility will be disadvantaged as employees opt for companies which provide greater freedoms.
However, as a recession looms, the tables could still be turned in 2023 as workers begin to worry about keeping their jobs. This could also add to the trend of ‘quiet quitting’ in which unsatisfied employees act without passion or enthusiasm, doing the bare minimum to get by in order to keep their jobs. A u-turn on flexible working options seems unlikely for most organisations, though.
Prediction #3: Adoption of AP Automation Rises Sharply
Following the records that were set in 2020 and 2021 for the number of AP automation projects initiated in North America, it was predicted that this trend would continue in 2022. With a focus on digital transformation, Ardent Partners saw huge scope for further adoption and investment for AP automation this year.
Digital transformation across AP functions is being further accelerated by sustainability targets. With rising awareness of climate change, comes increasing dissatisfaction with paper processes. Research this year showed that 80% of Governance, Risk and Compliance (GRC) workers believe that organisations should digitise and stop using paper copies.
During Cop27, the climate action summit, which took place in November 2022, a key takeaway was the proposed clamp down on ‘greenwashing’. Companies need to stop promising to become more sustainable by not engaging in deforestation or the use of fossil fuels, without acting on those promises. This will likely further fuel the paperless movement across business functions including AP and finance.
Also, as the cost-of-living crisis continues to impact businesses worldwide, the use of AP automation could help cut costs and drive revenue.
Prediction #4: AI Will Significantly Improve Productivity
With artificial intelligence (AI) emerging as a core component in the development of next-generation AP automation, it was predicted that 2022 would be a big year for AI-driven payables and payment solutions.
Tungsten Network recently conducted a poll in which nearly 40% of respondents shared that they’ve already adopted AI into their AP processes, with 15% of those adopting it in 2022.
2023 could prove to be another big year for AI adoption, as a further 38% of respondents shared that they haven’t automated their AP process yet, but plan to in the future. Only 23% of poll takers said that they have no plans to adopt AI.
Prediction #5: AP Becomes an Intelligence Hub
AP functions sit on a goldmine of sensitive data due to their direct access to financial documents. As such, it was predicted that AP teams would become an intelligent hub of across a typical organisation, supplying insights and knowledge that could help business leaders make more informed decisions.
In the middle of an economic crisis, companies have more need than ever to make informed decisions backed by data. This could accelerate the need for AP to become a source of valuable information and insights.
However, as new privacy laws are continually being introduced globally, this could impact the ability for AP teams to store and share data.
Prediction #6: AP and Treasury Become Strategic Partners
As data visibility is crucial in businesses today, the 2022 paper speculated that AP and treasury functions would begin to act more as strategic partners.
The impact of covid, the war in Ukraine, and the ongoing financial crisis means that the role of the treasurer is more important than ever as many financial risks are being managed simultaneously. This further increases the need for AP and the treasury to work together to manage cash flow, develop a supplier payment strategy, collaborate on forecasting, and formulate strategic insights.
Accounts payable functions can also work with the treasury to examine cost-saving opportunities and streamline AP processes.
Prediction #7: AP Will Help Manage the Extended Workforce
Ardent Partners’ research found that 46.5% of the average company’s total workforce is considered ‘extended’ or ‘non-permanenet’. In 2022, it was predicted that AP could play a pivotal role in ensuring that payment data is leveraged in workforce planning, and that key gig workers are paid on-time.
The ‘great resignation’ has resulted in many full-time employees leaving their roles for new opportunities. Mass walkouts means organisations have turned to contract workers to fill gaps.
It’s critical for AP functions to have the right processes in place for managing temporary or freelance workers, particularly if they’re based in global locations. If contractors are not paid on time or correctly, it will make it harder to attract and retain workers in the future. Companies should be leveraging e-payment solutions to ensure that payments are made swiftly and accurately.
Prediction #8: Supply Chain Finance Utilisation Increases
The rise of cloud-based solutions tailored to the needs of suppliers, rather than buyers, was expected to make supply chain finance more accessible to all. This would result in increased adoption of supply chain financing (SCF) options in 2022.
With rising operational costs, comes reduced cash flow for many businesses. Employing SCF could help bridge the gap between cash flow shortages, while strengthening supplier relationships and building business resilience.
Prediction #9: AP Continues its Upward Trajectory
Accounts Payable was predicted to continue its modernisation including ongoing digitisation, AP automation, resiliency, and more opportunity to prove AP’s strategic value to stakeholders and business leaders.
Improved automation means that AP professionals can focus on their core responsibilities while machines do the manual tasks, in turn adding more value to the wider business. With a recession lingering, AP functions continue to be vital in ensuring people are paid correctly and on time, proving business value. By continuing digitising invoicing processes, businesses can cut costs and turn AP into a profit centre.