Accounts Payable Optimization Study
How are Accounts Payable departments prioritizing process improvements?
Paper invoice processing takes too long, burdens staff with physical document routing, and results in lost or misplaced invoices, payment errors and late payments. Yet the majority of accounts payable (AP) departments remain overrun by paper. Despite the promise (and hype) of electronic invoicing, adoption among suppliers remains disappointing, and companies don’t expect it to increase significantly any time soon. Similarly, most companies are not using technology to automatically extract data from invoices to eliminate keying.
It’s against this backdrop that finance leaders must find ways to achieve their top objective of paying invoices to terms, while making it easier to route invoices for approvals and exceptions handling.
The objective of this survey was to learn how AP departments were doing in eliminating inefficient paper processes from their operations (not well, as you will read), determine their biggest challenges in processing invoices (not surprisingly, paper handling tops the list), understand AP’s priorities and key drivers (automating routing to ensure invoices are paid to terms), and discover what AP sees as potential obstacles (financial and labor resources).
The results further demonstrate the solid grip that paper has on invoice processing. For instance, while electronic payments continue to make major inroads in AP, electronic invoicing remains limited, and a cynic would point out that much of today’s electronic invoicing still requires manual intervention.
On the bright side, organizations recognize the challenges and are taking steps to convert paper to more easily managed digital images. And outsourced services offer AP departments a way to automate invoice processing, without incurring the significant capital expense, ongoing maintenance cost, and IT burden of on premise systems.
Paper invoice processing remains a fact of life for AP departments. And that reality includes a lot of manual keying of invoice data, burdensome physical routing of invoices, and lost and misplaced invoices.
All of these challenges are major obstacles to AP departments paying invoices on-time – their most important metric. Deploying document imaging and migrating to electronic payments are helping AP departments eliminate inefficient processes. But even bigger payoffs may be available from automated data capture and electronic invoicing – two technologies that have experienced slow adoption.
Outsourcing is an option for departments with too little money and time to deploy these technologies in their operations. Regardless of whether AP departments automate their own systems or leverage an outsourced provider to deliver automation, there is no time to waste.
Companies that delay automating AP processes will soon find themselves at a competitive disadvantage to peers that have automated and achieved better business outcomes and improved working capital management.