Amid talk of enterprise digitization, discussions about paper invoices and checks persist. New research suggests a vast divide between businesses that have embraced technology and electronic processes in the accounts payable department and businesses that instead prefer to retain those paper invoices and checks.
In its The State of ePayables 2018 report, Ardent Partners explores just how deep the divide is between these two ends of the digitization spectrum – and how much late adopters of eInvoicing and automation are paying for their procrastination.
In its survey of nearly 200 accounts payable and finance executives, Ardent Partners, on behalf of Corcentric, contrasted the top performers – the top 20 percent of businesses with the lowest average invoice processing costs and shortest average invoice processing cycles – to the rest of the herd.
Top performers spend five times less than the rest of the surveyed businesses to process an invoice, and processing times are two-and-a-half times faster, the report found. These top performers have also reduced invoice exception rates by 50 percent compared to the rest of the group.
According to researchers, straight-through processing (STP) is a "cornerstone" of top performance in the accounts payable departments. STP capabilities enable businesses to automate invoice processing and reconciliation, which leads to improved buyer-supplier relationships. The report also noted that STP extends opportunities like early payment discounts to the accounts payable department. Top performers have an STP rate that is 2.5 times higher than the rest of the survey's respondents, the report found.
Most top performers (52 percent) automate their procure-to-pay processes, and 48 percent have business networks in place to connect to suppliers (compared to 24 percent and 28 percent of the rest of the group, respectively). The rate at which best-in-class performers adopt eInvoicing is nearly double that of their competitors.
The Past – and Future – of AP Tech Adoption
The report indicates a clear divide between top performers and their competition when it comes to accounts payable efficiency. While the gap is wide, researchers noted overall improvement in the perception of the accounts payable department.
Whereas 33 percent of survey respondents in 2016 viewed AP as "very" or "exceptionally" valuable to their firms, that figure has increased to 52 percent in 2018, the report said.
Yet researchers also found that accounts payable is not top-of-mind for budget increases and project approvals, despite clear recognition among AP professionals that the department needs some work. Forty-one percent of all survey respondents said the high percentage of invoice exceptions is a top challenge today, while 39 percent of invoice approvals and payments take too long. Too much paper, high invoice processing costs and a lack of visibility into invoice and payment data were also cited by at least a third of survey respondents.
Most survey respondents support AP and procurement automation, while payment management was also cited by half of executives as a key focus area that has dedicated support staff in the AP department. But management fraud appears to be a new frontier for accounts payable professionals, with 87 percent of survey respondents noting that they manage fraud prevention efforts for their firms.
While executives across the board see increasing value in accounts payable as a strategic component of the enterprise, there remains a clear differentiation between top performers and the rest of the group when it comes to technology adoption.
Best-in-class respondents are nearly twice as likely to implement blockchain, while they are also more than 40 percent more likely to integrate artificial intelligence and to leverage electronic B2B payments than their competitors.
"The discussion of where accounts payable can go in the months and years ahead is deep and complex," the report concluded. "The AP function has many avenues in which to not only enhance its own operations, but [to] become a true partner in the digitized enterprise of the future."