35% of Firms Still Require CEO Approval to Pay an Invoice
Originally appeared in PYMNTS.com
Firms that process more than 20,000 invoices per month differ from other firms in a few ways. They are more likely to say they need their CEOs’ approval before they can make invoice payments, they are more likely to use electronic invoices and they process invoices faster, according to the Payables Friction Playbook, a PYMNTS and Corcentric collaboration based on insights from executives at 2,570 firms.
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About 35% of firms require their CEOs’ approval to pay invoices. That figure is much higher among the largest firms, however, with 53% of those processing more than 20,000 invoices per month saying the CEO is needed to approve invoices. In contrast, that’s a requirement at only 20% of the firms processing 5,001 to 20,000 invoices per month, and 22% of those processing 2,000 to 5,000 invoices per month.
Similarly, a sample average of 75% of firms use eInvoices. Among the firms processing more than 20,000 invoices per month, however, 85% use eInvoices. In contrast, eInvoices are used by only 68% of firms processing 5,001 to 20,000 invoices per month, and 65% of those processing 2,000 to 5,000 invoice per month.
More Invoices, Faster Processing
Another difference is that businesses that receive more than 20,000 invoices per month process them faster. The process takes them an average of 11.6 days compared to 15.6 days for firms processing 2,000 to 5,000 invoices per month and 16.5 days for firms processing between 5,001 and 20,000 per month.
This is part of a larger shift, as pandemic conditions continue causing companies of all sizes to shift to electronic payments as well.
To fully appreciate the extent to which invoice innovations can affect businesses’ bottom lines, it is necessary to understand precisely how much time and resources go into processing invoices in the first place.
The first step is the simple act of receiving them, which can take anywhere from a few seconds to a few weeks. The troubling part is that the invoice receipt process is the shortest leg of this race. It often takes longer to approve and pay received invoices.
A Culture That Values Efficiency
The evidence shows that accounts payable (AP) professionals from firms that process more than 20,000 invoices per year are not just being overconfident when they rate their companies’ invoice processing operations as “very” or “extremely” efficient. Despite having more invoices with which to deal and involving more people in the invoice approval process, they still manage to receive, approve and pay their invoices faster than others. They are also looking to adopt invoice innovations to make that process even more efficient.
These businesses not only have cultures that value efficiency, but also are demonstrably more efficient — at least in terms of speed — when processing invoices.
It is not entirely clear which these factors differentiating these companies from one another ultimately determines the speed at which firms can process invoices, but those with the most efficient processing operations fit a very particular profile: They tend to process more than 20,000 invoices per month, require two or more people — usually including their CEOs — to approve them and leverage eInvoice or optical character recognition (OCR) technology.
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