Increasing Invoice Volume Challenges Accounts Payable Departments, Which Still Rely Largely on Paper Rather than Automation, Study Shows
2014 AP Automation Study by The Institute of Financial Operations explores why some organizations have not adopted latest technology
Orlando, Florida (PRWEB) – October 15, 2014 – Accounts payable operations are seeing their invoice volumes increase, signaling improvements in revenue, but they’re not celebrating just yet. That’s because they’re bogged down in manual, paper-based processes instead of taking full advantage of automation.
Those are among the findings of the 2014 AP Automation Study by The Institute of Financial Operations, which surveys accounts payable professionals internationally every year about the use of the latest forms of technology.
“AP professionals are being called on to do more cash management analysis and financial forecasting than ever before, but they’re still handling the basic fundamentals of the job with manual tools,” said Ken Brown, the IFO’s executive director. “The good news is that executives at the highest level are becoming more aware of the efficiencies automation can bring to the process.”
Only about 9 percent of respondents reported that their operations are highly automated, which the study defined as receiving less than 10 percent of their invoices on paper. Three times as many (29 percent) said paper accounts for more than 90 percent of the invoices they receive.
Among other key findings of the study:
- Checks remain the most common payment method in business-to-business transactions, accounting for 50 percent of payments among the organizations of survey respondents — about the same percentage reported in the 2013 study.
- Electronic invoicing is keeping costs down. Of respondents who use this form of payment technology, 43 percent said their average e-invoice cost is less than $2, compared with 19 percent who have been able to keep their cost that low processing paper invoices.
- As the use of new technology grows, respondents are seeing decreases in error rates in their invoice entry and payment processes. About 40 percent cited decreases for 2014, compared with 30.9 percent a year ago.
- The process of data entry, validation, and approval for incoming invoices is taking less time. About 72 percent of respondents said it takes them five days or fewer. In fact, 10 percent reported it takes them less than a day, and 9 percent said it takes less than an hour.
- Optical-character recognition (OCR) technology is gaining ground. The survey shows an increase in its use to 38 percent, compared with 23 percent a year ago.
- The use of front-end scanning to extract data from documents has grown slightly in the past year. About 22 percent of respondents cited it, compared with 19.5 percent a year ago. However, the percentage of respondents who said their departments don’t use capture technologies remained unchanged at 25.6 percent since the 2013 study.
- Supply chain financing seems to be increasing in use. About 13.7 percent of respondents said their organizations have turned to this cash management tool, compared with 8 percent in 2013.
The study was sponsored by seven companies that partnered with the IFO because of their commitment to educating AP professionals about the latest best practices and resources available. The sponsors was Nipendo. Among their comments about the study and its results:
“A growing number of organizations are realizing the critical role the supply chain plays in their ability to compete,” said Eyal Rosenberg, CEO and Co-Founder of Nipendo. “Removing inefficiencies from procure-to-pay processes is a necessary first step in establishing an agile extended enterprise that can be responsive to market demands. As the survey shows, while there is a gradual uptick in automation and efficiency, the opportunity for further improvement is immense. At some point, we are all going to look back at these survey results and think, ‘How could we do it that way?’ Those on the front end of the adoption curve will be better positioned for success in an economy that is rapidly becoming more global and interdependent.”
About The Institute of Financial Operations
The Institute of Financial Operations is a membership-based professional association serving the entire financial operations ecosystem, with a particular focus on the accounts payable and accounts receivable disciplines and the related fields of information management and data capture. The Institute grew out of the merger of four associations: International Accounts Payable Professionals (IAPP), International Accounts Receivable Professionals (IARP), the National Association of Purchasing and Payables (NAPP), and The Association for Work Process Improvement (TAWPI). Based in Orlando, Fla., with affiliates in the U.S., Canada, and the UK, The Institute serves as a global voice, chief advocate, recognized authority, acknowledged leader, and principal educator for people in financial operations. Institute members have access to benefits and leading-edge resources such as the award-winning Financial Ops magazine, a content-rich website, educational and networking events, online educational offerings, certification and certificate programs, career resources, and volunteer opportunities.
About the sponsors
Nipendo provides a cloud-based platform for buyer-supplier collaboration that enables best-in-class procure-to-pay automation across the supplier ecosystem. By enabling real-time invoice approval and reconciliation, Nipendo empowers companies to optimize their working capital positions, accelerate cash conversion, capture early payment discounts, and provide access to supplier financing. Unlike existing solutions that require custom setup for each supplier connection Nipendo offers a cloud-based solution that facilitates rapid onboarding of suppliers. As a result, businesses are able to significantly expand the reach of electronic invoice processing across their supplier ecosystem, lowering cost while increasing capital efficiency and profitability. Nipendo Supplier Cloud is used by leading organizations across industries, including multinationals such as HP, IBM, KLA Tencor, Israel Aerospace Industries, Lilly, and Teva Pharmaceuticals. For more information, visit https://nipendo.com.