We may be present for an historic moment akin to the advent of electric lighting, or at least the leap from DVD to streaming TV: It’s the demise of the much-maligned paper check. That’s no optimistic, dawn-of-the-decade prediction – it’s happening fast, and that’s the whole point.
The PYMNTS December 2019 Next-Gen AP Automation Tracker details explosive innovation in real-time payments for business, driven in no small part by accounts payable (AP) professionals. They understand that the most vital of all business functions – getting paid and paying out – is still mostly based on paper checks, postal mail and saintly patience. They don’t love the inefficiency of the old system, especially not given the presence of “instant” options.
Those options couldn’t come at a better time. Many thousands of SMBs continue to struggle with managing the paper check and postal mail cycle, and it’s not limited to smaller businesses. Previous PYMNTS research from 2019 found that 80 percent of all firms are still using paper checks, although less than 15 percent still prefer this method of payment. That friction sends uncertainty rippling down supply chains, even as companies strive to solidify relationships and gain trust with unfamiliar cross-border trading partners beckoning with new markets.
As a torrent of technology engulfs this problem, financial institutions (FIs) are having a rare moment of introspection about what their customers want, and the best ways to provide it.
The Only Thing to Fear…
Accountants hate inefficiency. It distorts equations in inconvenient places (like the P&L). Not surprisingly, PYMNTS finds that over 46 percent of AP professionals want electronic invoicing, and nearly 36 percent want automatic order matching capabilities. Close to one-quarter of AP pros surveyed also want to bring ePayables and virtual cards online for treasury operations.
That desire is being tempered somewhat by fears of integration cost and complexity. At the recent AFP 2019 conference, Bottomline Technologies shared its survey of FIs, with findings that integration fears are hindering adoption of real-time payments despite a raft of benefits.
In a statement, the company said, “…integration is top of mind, with nearly half of respondents (45 percent) noting that integration into existing technology is their biggest challenge when it comes to greater adoption of AI in banking and payments. Additionally, as real-time payments (RTP) gain traction, 40 percent of survey respondents feel that accounting and ERP integration is their primary concern with adoption of corporate RTP in the United States.”
Bottomline Technologies made trade headlines in Q3 2019 with its Real-Time Payments (RTP) module for its Digital Banking IQ suite. It said RTP promotes the value of “end-to-end processes and experiences around payments,” addressing the twin evils of inefficiency and bad CX.
Digitize to Actualize
The historic moment hinted at earlier isn’t far off, at least not in relative terms. AP automation is making giant waves in the B2B payments space, just as P2P has created an insatiable appetite for instant payments between individuals. It’s the word “disruption” that makes people uneasy – and we don’t mean the Uber kind. Opening up banking architecture to dozens of APIs is not lightly done, so paper checks will continue to clog up the works for a bit longer.
What companies have realized, however, is that AI-powered functionality is being configured specifically to digitize legacy FIs. This activity has placed faster, safer payment rails at their disposal, putting next-gen AP automation within the grasp of SMBs and big players alike.