When it comes to automated invoice processing, companies are more likely to enjoy the cost-saving benefits of streamlined accounts payable tools. That’s certainly a crucial element to these technologies, but a new whitepaper from PayStream, underwritten by Corcentric, finds that companies are often turning away from a less obvious benefit of automated AP systems: strengthened supplier relationships.
PayStream’s new report, published Monday (Sept. 14), explores the state of invoice workflow automation (IWA) in AP departments this year.
IWA solutions, PayStream notes, are designed to address a key challenge for members of the accounts payable department: managing the lifecycle of their supplier invoices without error or lost documentation. A robust IWA tool, the report says, is crucial to building and maintaining positive relationships between business buyers and suppliers.
That relationship can quickly crumble if AP departments stick to manual invoice management processes, however. According to PayStream, IWA is one of the highest-ranked tools of importance for making back-office processes more efficient, according to research. But companies told analysts that saving money — not building stronger supplier relationships — is driving IWA adoption.
Like so many automated accounting tools on the market today, implementation of IWA technologies is struggling. While 41 percent of employees surveyed by PayStream Advisors said they currently use an invoice automation tool, 40 percent said they are not using such software, nor do they plan on it in the next year.
But for those that do take on an IWA tool, the largest benefits are those that save companies time and money.
More than half of those surveyed said a reduction in labor and processing costs is the key driver behind shifting to an automated invoice management system. Companies are also focused on making their accounting procedures more efficient. Just shy of one-third also said that these tools lead to fewer misplaced invoices, while 30 percent said they shorten approval cycles.
Researchers at PayStream acknowledge the cost- and time-saving benefits of automated accounting tools. Analysts found that, on average, manual invoice processing methods cost companies $40.70 to process each invoice.
The majority of businesses surveyed (84 percent) told PayStream that they do not monitor the cost of invoice processing, meaning many companies that do not implement IWA tools have no idea what they are paying now to process an invoice, nor how much they can save by adopting automated services.
PayStream’s whitepaper also highlighted the importance of digital invoice data capturing in being able to onboard automated invoice processing solutions. But analysts revealed that the paper bill is alive and well in the accounts payable department, with half of companies saying that most of their invoices are received in paper format.
Getting Suppliers Involved
PayStream analysts highlighted the ability of IWA services to strengthen relationships with suppliers, but as it turns out, employees are less concerned about these relationships when deciding whether to implement these solutions.
According to the survey, just 9 percent said improved vendor satisfaction is the main driver behind their decision to launch an IWA solution.
“The three main areas that become more efficient with invoice automation are working capital management, supplier management and spend management,” the report concluded, adding that automated invoice tools often include a portal for suppliers to help streamline the invoice sending process. “These portals also facilitate better supplier-buyer communication and dispute resolution,” the paper noted.
PayStream data, however, suggests that companies are prioritizing the financial benefits of the automated AP tool and less so the benefits to maintaining an effective business relationship with their sellers.
But on a positive note for suppliers, analysts found that companies are more often paying their suppliers on shorter timelines compared with only a year ago.
Forty-three percent of those surveyed said that this year they take less than five days to approve an invoice from the time they receive it — significantly up from the 35 percent of companies that said they could do so in 2014.
Processing an invoice in less than five days was also the most common timeframe reported by companies, with 39 percent adding that it takes 5–10 days to process a bill. No company reported taking more than 45 days to process an invoice, down from 3 percent in 2014 that said it took them that long to do so.