US Firms step up spending .... higher AP volumes will follow

As reported last week in the WSJ, companies are stepping up spending on capital goods, equipment, machinery and other related products.  The article, here, has an excellent chart showing manufacturers new orders in May.

"We're seeing global commerce expand and as a result we want to be very aggressive in our international expansion," said Alan Graf, chief financial officer at Fedex Corp. "We're back on the offensive."  The WSJ article then goes on to note that they intent to spend over $3B on equipment and facilities, with 2/3 of that for new growth.  3M and Cummins are others noted in the article as spending more this year than last.

Such increased spending translates into more activity in the AP department of these companies, as well as others following the same increased spend patterns.  More spend = more invoices for that spend from the suppliers, thus more activity in corporate AP and in the field who need to approve the PO's and invoices.  And with many US companies having leaned out their AP operation between Q408 until Q409, there are less now AP resources to handle that spend.

Should spend continue to grow, companies will need to look at rehiring AP professionals or investing more heavily in technology that improves throughput and keeps the costs per invoice for processing low.