AP Paper Chase Continues, Says New Report

From: IOMA

Paper invoicing continues to persist in the 80% range, while payments via paper checks averages around 65%, according to E-Payables: Advancing A/P Automation, a new report from the Aberdeen Group. The report also states that over 60% of companies lack visibility into AP spend and invoice data. What's more, less than one-third fully automate key sub-processes within AP.

"Best in Class" companies studied have had notable success using automation to improve AP performance. They report: 91% lower invoice-processing costs; 46% shorter process cycle time; 12% fewer late payments; and 30% less time responding to inquiries.

To achieve Best in Class status, the report states that the steps to take include the following:

• move toward a fully automated environment that integrates AP with existing procurement and financial systems;
• establish a linkage between your AP goals and objectives and the broader goals of the finance and procurement groups and then build a business case for automation that incorporates a complete view of the source-to-settle process and heavy involvement from your finance leadership;
• develop disbursement strategies in concert with your treasury and finance teams that seek to optimize working capital; regularly audit your payment performance based upon the key goals and objectives of the treasury group;
• leverage data visibility to drive performance improvement across the enterprise. The invoice data should be used to improve leverage in contract negotiations with suppliers, to ensure proper receipt of volume discounts and rebates, to reduce payment errors and overcharges, and to provide the basis for making working capital decisions; and
• increase collaboration with IT to assist in the development of a portfolio strategy to best manage an array of electronic receipt and payment methods.