A host of new technology solutions is moving accounts payable (AP) technologies into a new frontier. If you are responsible for your company’s AP function, take note: While you may not be ready to join the cryptocurrency revolution, you should at least be thinking about how to harness some of the new ways of processing the bills your company owes.
Invoicing in the Cloud
“In the last five years, accounts payable has experienced a technology revolution that is moving departments away from the paper-intensive manual processes of the past,” said Billtrust CEO Flint Lane.
Billtrust is one of a host of recent entrants into the world of cloud-based accounting and boasts of having invented what the company calls “payment cycle management,” a process which automates invoice delivery.
Lane said that tactics like payment cycle management evolved from “an increased management focus on business process improvement, cost reduction and the availability of new disruptive technologies.”
PayPal Moves beyond Simple Online Transactions
Online payment system PayPal is now muscling into the action with the launch of PayPal for Marketplaces, which is billed as a “comprehensive payments solution for marketplaces, crowdfunding platforms, and other environments where people buy and sell goods and services or raise money.” PayPal says its solution is ideal for multi-party commerce platforms.
“The marketplace doesn’t want to solve for everything that goes into moving money, particularly as [they] become more global and the regulation gets more complex,” the company’s chief operating officer said. “We just take care of those things and make sure that accepting and distributing payments is seamless so they can focus on the selling — [which is what] they are really there to do.”
Is Traditional Money a Thing of the Past?
Further disrupting traditional accounts payable and receivable avenues is the advent of cryptocurrency, digital money that uses blockchain technology and decentralized control. Bitcoin was the first cryptocurrency, and after a somewhat rocky start—untraceable money could be used for nefarious activities, some users discovered—there are now a host of players in the market and plenty of opportunities on the horizon.
“There’s a large number of pitfalls that come with using traditional financial institutions. For example, as a business, you’re probably faced with regular fees for the transactions you make. You also most likely find that international money transfers take a long time to process,” noted a columnist in Entrepreneur. “Cryptocurrencies cut out these annoyances. There are no fees attached to these digital currencies because they’re not owned by anyone. Instead of being driven by profit and owned by large corporations and government entities, cryptocurrencies were invented by people, for people.”
Those in AP and AR should put cryptocurrency on their radar, even if they are not currently seeing transactions using them. Bitcoins and the like are fast, cheap, and secure to use—options likely to become more and more appealing in the future.
“Clearly, cryptocurrency has opened up new ways to think about everything from exchanging value to transfers of ownership,” wrote one accounting firm. “While the future of Bitcoin is far from certain, accountants need to understand blockchain technology and cryptocurrency in order to keep up with a changing industry.”
Challenges of course come with advances, and if you’re considering crypto-strategies, keep in mind you’ll need to contend with IRS regulations on virtual currency transactions and with new security threats and concerns.
At Least Consider Dumping Pen and Paper
Regardless of how companies receive and send money, they need the right technology in place to keep up with changing times, reports Accounting Today. Inefficient manual processing in particular presents ripe opportunities for missing prompt payments.
“Lacking the right technology, many companies cannot meet timely payment obligations; this potentially impacts supplier relationships and early payment discounts offered by suppliers who hope to incentivize companies to pay faster,” the website said. “Financial process automation (FPA) is making a difference here, helping align accounts payable best practices with the realities and scope of maintaining on-time payments.”