Top Accounts Payable Metrics for 2019 and Why They Matter [Downloadable Webinar]
In April, I had the pleasure of participating in an Ardent Partners webinar conducted by Andrew Bartolini that tracked the wide array of changes occurring in the role accounts payable plays in a business. Andrew is the Founder and Chief Research Officer of Ardent Partners which has spent over a decade looking at the ways companies are adopting the technology that impacts their finance functions, from procurement to payables.
What is clear from Andrew’s research is that, even though the technology has advanced, too many companies are not availing themselves of these advances, preferring to stick with less efficient methods of invoice processing and payments. I don’t think we have yet reached the tipping point. On a positive note, however, the perception of accounts payable as an exceptionally or very valuable function has increased, with more than half of companies surveyed claiming this point. These companies understand the potential of AP as a strategic unit that is part of a larger finance organization.
Companies also agree upon the major challenges that plague their invoice approval functions. Of those surveyed, 39 percent note that the length of time it takes to process and pay invoices is still too long, and 41 percent reveal that handling exceptions is a significant burden. That second concern makes sense when you consider that nearly one-quarter (24%) of AP’s time is spent handling exceptions. Most of these problems are due to a continuing dependence on manual- and paper-based processes. To evolve as a strategic business function, AP can’t continue spending valuable time correcting bad information and interacting with suppliers to resolve these exceptions.
Companies are transitioning to automating their processes, but very slowly.
Manual vs. electronic invoice processing – Automated accounts payable solutions have been around for decades, yet more than 55 percent of companies surveyed are still manually processing their invoices.
Manual vs. electronic B2B payments – While the numbers for e-payments are in the inverse, with 59 percent making B2B payments electronically, that still means that more than 4 in 10 companies are still paying their suppliers manually, incurring the costs of processing, cutting, and mailing checks.
One of the biggest impediments to realizing the benefits of automating invoice approvals is the reality that less than 25 percent of suppliers are submitting invoices electronically. Without suppliers on board, companies can’t really get the full savings in time and money that an automated solution should provide.
Early pay discounts – Only 19 percent of early pay discounts are captured. That may not mean a great deal on a single invoice, but take that to its logical conclusion for literally thousands of invoices throughout the year and you can see how that can leave a significant amount of cash left on the table.
Assessing the “Holy Grail” of processing metrics.
Andrew identifies straight through processing (processing invoices electronically without human intervention) as the “Holy Grail” for processing metrics. But only 26.6 percent of invoices are processed this way. To understand how important this process is, it is important to realize that this capability totally frees up accounts payable professionals to focus on more strategic tasks that can benefit the company. Best-in-class companies that have 90 percent of their invoice data flowing through business logic and matching enables staff to use this data to make smarter payables decisions; effectively transforming line workers into knowledge workers.
Although I’ve focused on some of the numbers that have kept AP from realizing its full potential, this webinar offers greater details on these metrics and so much more.
Discover what opportunities you may be missing out on by downloading this webinar.