The pandemic is accelerating the process of turning all kinds of business activities into digital capabilities.
It's easy to see the impact of digital transformation from a consumer perspective. Digital payments, whether through our bank or via a service like PayPal or Venmo, have become as common as cash used to be. The shutdown due to the COVID-19 pandemic has only accelerated the rate at which we consume such services.
But it has also accelerated digital payments on the corporate side, as well. After all, businesses still have accounts payable and receivable whether they're open to the public or not.
The State of ePayables 2019—I'll wait a moment while you get over your surprise that there exists such a report—offers a list of challenges associated with manual processing of invoices that could be applied to any manual process. The same challenges associated with configuration changes across infrastructure application services plague the business, too. Manual data entry of any kind will be subject to human error, and folks in IT will recognize the pain of lengthy approval and exception cycles.
The report notes:
By 2021, 51 percent of accounts payable practitioners anticipate that their department will eliminate most of the paper invoices it currently receives from suppliers, per IOFM’s 2018 Future of Accounts Payable Study. Automation will eliminate most of the laborious steps associated with invoice processing including invoice receipt and validation, extraction of header and line-item data, matching of invoices and purchase orders, routing of invoices for approval or exceptions handling, and the upload of information on approved invoices to an ERP and payment application.
The payoff is in more than just time saved and errors avoided. It's also in "early payment discounts" and "higher card rebates as a total percentage of spend."
It's not just on the payable side. Accounts receivable, too, is under significant pressure to digitize—and quickly. Research found staggering inefficiencies still extant in invoicing processes in 2019:
PYMNTS research found 72.4 percent still receive invoices via postal mail, while 43.8 percent receive invoices via fax machines. Physical invoices are clunky and expensive to process manually, taking an average of six days to process at a cost of $16 to $22 per invoice.
Costs of processing aside, the impact on business is to impede growth. The report further notes that an average small business has 24% of "its monthly revenue held up in AR, terms or trade credit" and posits one cause as the continued reliance on paper checks for payment.
Through the use of technology the adoption of digital accounts payable and receivable will net businesses significant savings. Processes will be optimized; a theme which, according to our research, dominates the benefits organizations hope to realize from their digital transformation initiatives: business process and IT optimization.
This is just two of a hundred hidden digital capabilities that are overshadowed by their more glamorous, consumer-facing counterparts.
It is natural that we view digital transformation through the lenses of a consumer, because that is the side of digital business we are most exposed to. Banking apps. Streaming apps. Fitness apps. Retail apps.
But inside business there are many more business activities that are being—or will be—expressed as digital capabilities through transformation initiatives. Many of them will present an interface to external constituents via an application or an API. That means they will need to be monitored, measured, and protected.
Like their consumer-facing counterparts, they are going to need application services to provide those capabilities—and more. If your primary conduit for processing accounts payable—and conversely accounts receivable—is not available, business will be impacted. Attackers will quickly discover these new interfaces and seek to exploit them, either for fun or profit. Fraud will be a problem that can only be solved by real-time analysis of data able to discover the patterns and behaviors that indicate an interaction is not legitimate. Process bottlenecks will be discovered via data, not status reports.
Application services will provide the visibility needed to ensure digital capabilities don't turn into digital disruptions. The more that business is expressed through applications, the more application services will be a critical component to not only securing and delivering them but to providing the data needed to fuel emerging AI-based services that protect, enhance, and grow the business.