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Invoicing & accounts payable: 4 predictions for the future

23rd Jan 2023
Brought to you by
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Aurelia are the automation and software experts for accountants and finance leads. We want to to...
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In 2022 everyone was talking about MTD ITSA and how it will change the accounting industry and software. With the announced delay the attention shifts now to the new kid on the block. Well, not that new but somewhat neglected recently - invoices and accounts payable. Payments were the hot topic during DAS last year and Accounts Payable definitely shined through during the Accounting Web Live Expo. With lots of solutions trying to steal the spotlight and attention shifting away from MTD ITSA, what can we expect in the space? Here are our 4 predictions as we enter 2023 at full speed. 

Accounts payable and invoicing: 4 predictions for the future | Aurelia on AccountingWeb

Recession puts spending in the spotlight

The biggest financial topic for all coming into 2023 is the increased cost of living and maintaining the business, inflation and ramping economic crisis. It all started with the pandemic when businesses realised two things: firstly, costs can be massively reduced by not having a physical office and multiple work trips per year and secondly, that they never actually looked at where the spending is coming from. 

Now, in order to stay afloat they have to have better and instant insights into their spending data which is really difficult given most of the software available on the market looks at summaries and books retrospectively rather than in real time. This is in line with the findings from Unit4 report- 82% of respondents claimed they would like to invest in software that would give them more real-time insights into the spending data. Especially that the same survey discovered that 41% of the businesses are not hitting their financial targets.

With all that, businesses will be looking at minimising the spend and cutting cost where possible in three ways:

  • More robust approval processes to make sure the best deal was done, the vendor was approved and all expenses can indeed be claimed for
  • Easy way to deal with reimbursements, approvals and invoice reconciliation so that more time and energy can go into actual spent analysis and forecasting
  • Need for a detailed view by categories and departments to see exactly where the costs are coming from 

Software providers dealing with accounts payable and spending will need to respond to those needs in a comprehensive way that does not require stringing along multiple different tools and a steep learning curve.

Moreover, with recession come cuts in staff and personnel which combined with the shortage of skills drives the need for automated expense management and data entry processes. 

Shortage of skills, ‘the Great Resignation’ and layoffs driving automation

With recession come layoffs, which only add to the massive shortage of staff and talent following ‘the Great Resignation’. As a result, there are less people to do the actual work, spending time on admin tasks during billable hours is just out of question and more pressure and time crunch means mistakes will be more common. Ten minutes here and there may seem insignificant but if added up, can turn into a substantial revenue bleed. Apparently, in consulting for example, time spent on non-billable client work can add up to 15% of revenue.

Where software can be asked to do the manual work of sending invoices or paying bills, it will free employees’ minds and time to do more and do what really matters. 

The same applies to the accounting sector which is facing a substantial skills shortage. 

Less and less young talent is attracted by the accounting profession (honestly, so many articles have been written about it on Accounting Web recently). As a result of that, there is less brainpower to do the job, and more pressure on each individual accountant to deliver quality service. 

As a result, accountants will be more inclined to ‘outsource’ some of the traditionally manual work like data entry, invoice reconciliation or even client chasing to automation software so that they can meet the demand and provide other services along with just the regular bookkeeping and tax. 

Essentially, adopting automation when faced with reduced man and brainpower can maximise productivity for both practices and businesses of any size thanks to less errors, manual work and more time. 

Payments as accounting service

Considering all the above and overhearing the conversations at the accounting conferences payments may be coming more into accounting practices as an add-on service. Business owners will be chased by the vendors for on-time payments more and looking to outsource the pressure to someone. Specifically their accountant. And this opens up an avenue for extra revenue for accountants if they can adopt software that allows them to sort payments on behalf of their clients in an efficient and secure manner.

On the business side, we are definitely facing a late payment crisis which will need to be addressed as companies try to stay afloat. While this applies to Europe, Atradius Payment Practices Barometer for Eastern Europe report stated that just in Czech Republic 48% of invoices are overdue and we can guess the situation is similar in the UK. There will be an increased pressure (and perhaps even incentives) from the vendors to settle payments on time so they can manage their cashflow in real time. 

The problem of unpaid invoices and simplifying the process of payments has already been picked up by software companies - both big and small try to provide a solution. The problem we see is that a vast majority deals only with the payments side of accounts payable meaning that companies and practices need to accrue extra cost of adopting new software on top of the stack they already have. We explored this a bit more in depth in our article about the worst account payable tools. 

Death of the paper invoice 

Last trend we are likely to see is the slow death of a paper invoice. It’s unlikely that paper invoices or receipts will disappear in 2023 but we see a major shift towards digital records which was accelerated with the introduction of MTD in the last few years. While MTD ITSA is not coming to force yet, it is still on the horizon and digitising businesses and practices is an industry-wise trend.

And this ramping digitalisation makes it pretty clear that invoices and receipts should be  ‘readable’ to software - easy to process and extract information from them. Another signal pointing towards moving away from paper and into digital versions of invoices and receipts is the slow emergence of the e-invoice. While still not fully adopted and concerning mostly international vendors working with government organisations, it’s making big strides in Europe and will inevitably knock on UK doors. Hopefully sooner than later. 

Invoice Inbox - invoicing and accounts payable solution for 2023

In this article we’ve alluded a couple of times to the fact that the majority of the available software on the market solves only one side of accounts payable and invoicing - either just payments, or just processing or just approvals. While not uncommon to build up a massive stack of software, especially considering the need to watch out for the unnecessary costs, it’s probably not the best approach.

Our Invoice Inbox is the accounts payable and invoicing solution of the future - handle everything from collection, processing, matching, payments and soon as well, raising invoices, using one tool. Chat to our accounting automation expert today and see how we can optimise your tech stack to prepare for the future.

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