As the business world enters a new era in 2024, the Accounts Payable (AP) function stands at the forefront of significant transformation.
The challenging market, growing economic uncertainty, the emergence of artificial intelligence (AI)-powered systems, and increasingly sophisticated payment fraud threats have forced AP departments to rethink the way they operate. Experts predict these factors will shape the year ahead, transforming the AP function’s focus from tactical actions to strategic thinking.
Economic Uncertainty Demands Optimized Efficiency
As 2024 unfolds against a backdrop of lingering economic and geopolitical uncertainty, businesses are adopting a cautious approach to their finances.
The past year in finance was riddled with economic uncertainty, accompanied by challenges like staffing constraints and the need to optimize efficiency with limited resources. Many of finance's current trends and hurdles aren’t fading away — they’re evolving. For finance professionals in Canada, understanding this landscape is crucial. It’s a call to action to recalibrate priorities and prioritize digital transformation and automation to keep pace with the shifting market. The economic uncertainty that is expected to remain in 2024, makes effective collection of AP essential.
Cautious Approach towards Cash Flow Monitoring
The lack of financial certainty is also leading to a more cautious approach from many businesses. Finance professionals are concentrating on cost reduction and efficiency rather than taking risks.
To move the needle on cost-saving initiatives, many businesses are doubling down on back-office automation. AP automation remains a top priority because it provides substantial operational efficiencies and helps teams track payment flows and gain control over payment transaction timing.
Continuation of Flexible Working Practices
Since the COVID-19 pandemic, flexible working has taken a firm hold. Despite calls for employees to come back into the office, it appears hybrid work is here to stay — especially among finance teams. Remote and hybrid working patterns are still very much a part of life. In these hybrid environments, automated AP processes become even more critical. It’s too challenging for remote staff to physically collect invoices, manually route them for approvals, check signatures, and authorize and distribute payments. So, there is a move to embrace the automation necessary to ensure that hybrid or remote AP work environments work efficiently. The work environment must be optimized for all employees, no matter where they work.
A Growing Emphasis on Data
AP data is now seen as essential as a source of strategic value, especially in the current financial climate, making timely and accurate AP data vital. Lack of visibility in this area can damage businesses, as it can directly impact relationships with customers and suppliers.
Accounts Payable Departments Embracing Artificial Intelligence (AI)
AI is a game changer for back-office functions that are overrun with manual tasks.
The technology analyzes large volumes of data to recognize patterns, make decisions, solve problems, and perform other tasks that previously required human intervention. Few technologies have generated as much excitement – and fear – among AP professionals as artificial intelligence. The prospect of eliminating manual, repetitive tasks and improving decision-making will be too much for AP departments to pass up in 2024.
AI will free front-line employees from the drudgery of manual tasks, allowing them to focus on fulfilling activities that will elevate their careers and their departments. AP professionals must harness AI, dive into the game-changing influence of AI technologies, including generative AI, and discover how they can automate processes, enhance decision-making, and revolutionize your AP function.
Digital Payments Continue to Rise
Digital payments are continuing to emerge as the cornerstone of cost-effective and secure payments. The trajectory is clear, Canadian businesses are steering toward electronic payments, recognizing its pivotal role in modern finance. Finance departments must work with technology partners that can help you seamlessly enroll vendors in digital payment processes and provide maximum return on investment.
Tip: As you embark on digital transformation efforts, take it one financial function at a time — but remember that AP is a great starting point.
Supporting a Customer-Focused Approach
Customers expect a business to be efficient and provide good service. Inefficiency in the AP process can adversely affect these aspects of customer service. In this environment, there is a trend to optimize AP performance to improve customer relationships.
Security and Fraud Prevention
Increased digital transactions and remote working have necessitated an enhanced focus on robust cybersecurity and fraud prevention in the AP process. This AP trend involves the adoption of advanced encryption, AI-powered anomaly detection, and multi-factor authentication to mitigate risk and improve stakeholder trust while maintaining regulatory compliance.
The Role of AP Professionals Will Evolve
Unfortunately, most AP professionals don’t have to use their imaginations – that’s their reality. The average AP practitioner spends a major part of the day on manual, repetitive tasks, such as keying data, chasing down invoice and payment approvals, fixing errors, printing checks and stuffing them into envelopes, and responding to calls and emails from suppliers about their invoice and payment statuses. AP managers spend more time each day processing transactions than on the managerial tasks they were hired to perform.
Fortunately, AP professionals will likely see their roles change in a big way in 2024.
More accounts payable departments will modernize their systems and processes to free staff to focus more time on higher-order activities, such as analyzing data and collaborating with stakeholders.
Elevating the AP role will help mitigate burnout, increase employee satisfaction, and make it easier for businesses to attract and retain talent in a tight labor market.
Final Thoughts
These finance trends will continue to shape the AP function as we progress through 2024. Managing your AP is paramount to running your business. Monitoring and clearing them as and when they’re due ensures your business does not suffer any cashflow problems. Having control over your AP and having an up-to-date picture of their status will help you plan (like maybe business expansion plans or adding a new line of product or service).
Filing Taxes has been supporting clients all over Canada to streamline their financials more effectively and productively. With reliable AP & AR services, we strengthen your financial system by efficiently updating your accounts and recording accurate and real-time receivables and payable transactions.
Our accounts payable and accounts receivable services in Toronto focus on delivering a full suite of services that are tailored specifically to your business.
Our team of expert-certified bookkeepers and accountants in Toronto is equipped to handle a wide range of AR and AP tasks. Feel free to reach out to Filing Taxes at 416-479-8532. Schedule an NTR engagement appointment with us and take the first step toward proper management of your finances.
Disclaimer: The information provided on this page is intended to provide general information. The information does not consider your personal situation and is not intended to be used without consultation from accounting and financial professionals. Salman Rundhawa and Filing Taxes will not be held liable for any problems that arise from the usage of the information provided on this page.