Taking A Communications Approach To AR-AP Connectivity

Communication is key to any high-functioning relationship, and the enterprise is no different. Facilitating communication between business partners is mission-critical, particularly in today's environment of high volatility and complexity.

While there are plenty of avenues to facilitate that communication, one of the most prominent involves the financial transaction between a company and its supplier — and all of the workflows surrounding it. For Quadient, a B2B service provider focused on facilitating that communication between middle-market and small companies, recognizing that the invoice was often at the center of this communication became an important point in its growth trajectory.

"When we look at the detail of the communications that our systems are being used to manage, in a lot of areas, the communication flows going back and forth have to do with financial transactions, and with invoices specifically," said Chris Hartigan, chief solution officer, customer experience management at Quadient.

Speaking with PYMNTS, Hartigan explored the opportunity for small and medium-sized firms to approach accounts receivable (AR) and accounts payable (AP) not merely as internal workflows, but as bridges of communication that drive connectivity between themselves and their essential business partners.

Driving Automation

Exchanging information and data is at the cornerstone of automation, especially in areas like AP and AR. So for Quadient, an organization that helps its business clients manage those communications, it seemed a natural fit to acquire AR automation company YayPay several years back. And the firm rounded out its presence within B2B financial workflows through the more recent acquisition of Beanworks, announced earlier this month.

According to Hartigan, today's enterprise — particularly in the SMB segment — needs simplicity in order to embrace automation. "Businesses that try to manage 20,000 to 30,000 invoices, and the payables associated with them, simplicity and ease of use are paramount," he said.

By facilitating the exchange of invoices and other key workflows from one business to another, the mode of communication then becomes an avenue for an organization to embrace automation as well as the data that results from it. The data from those invoices, as well as from the payment itself, can be used to inject a higher degree of analytics and business intelligence for AR and AP teams to wield, noted Hartigan.

The AR-AP Connection

According to Hartigan, the same businesses working with Quadient to automate accounts receivable often return to automate accounts payable workflows, and vice versa. That's because for many of these smaller firms, there is a single financial team managing both workflows, and then some — making automation all the more important. But AR and AP aren't merely related workflows within a single enterprise. When approaching automation from a communications standpoint, it becomes clear just how intertwined the processes are — and smaller firms are beginning to make that realization.

"The mid-market and small business market are beginning to see the convergence of solutions across multiple touchpoints," Hartigan said, adding that "one organization's AR challenge is another organization's AP challenge." Indeed, AR and AP are inherently related — and, with single teams managing both, they're embracing an overlap that has the potential to break down legacy silos and boost visibility into the flow of data and money between enterprises.

Now that Quadient operates on both ends of the spectrum, Hartigan said the company will begin exploring greater inclusion of the payment, not just the invoice, at the heart of that communication between firms. Yet while more SMBs are embracing the opportunity to drive automation, efficiency and business intelligence by deepening the AR-AP connection, he also noted that penetration of AR and AP automation technologies remains relatively low.

"There is maybe 20 or 30 percent penetration of these types of technology in the small and medium-sized segment," he said. "That leaves a tremendous amount of opportunity. The organizations in this space are starting to understand the benefits of automating and digitizing these workflows and processes."