The Accounts Payable (AP) process has long been perceived as a cost of doing business, and the department has also been considered one of the less efficient parts of an organization. However, this is not the fault of the hardworking individuals within the department, who toil away with what’s given to them: paper invoices, paper checks, and other manual, paper-based processes that stand between the department and the efficiency its employees desire.
Simply put, it’s not the people. It might not even be the process. It’s the paper.
Overuse of paper in the AP process is so bad, in fact, that according to PayStream Advisors, 52% of procurement and finance professionals said an overreliance on people and paper-based processes was “[…] the biggest barrier to success in improving AP Operations.”
The Long Road to Purging Paper
While there has been progress, there is still a long way to go. According to IOFM’s 2015 Accounts Payable Technology Survey, 95% of businesses still issue paper checks, 24 percent of businesses make between 76 percent and 100 percent of their payments via check, and 31 percent issued more checks than three years prior.
But it could be better. The AP and payment process is experiencing a renaissance, one that has not been seen since the invention of the Check Clearinghouse… in the 1700s. Technology has made it easier for businesses to increase working capital, improve compliance and security, and focus on initiatives that could improve supplier relationships.
More and more businesses are interested in or actively working to “electronify” AP, with 92% of businesses displaying high or moderate interest in increasing the volume of payments made electronically (Remittance Coalition), due in part to reduced costs, immediate recording of liabilities, improved payables efficiency, enhanced visibility, and increased working capital management.
Why It Pays to Act Sooner than Later
While we’ve mentioned many of the reasons it pays to work on improving the AP process with technology, there are good reasons it pays to start soon. Whether you’re at a small and growing business or an established organization, it’s likely that your transaction volume is increasing, and that means more invoices are landing on the desk of AP professionals.
According to Concur, one of the biggest pain points that comes with business growth is the invoice process. Top responsibilities cited as more challenging due to growth include collecting invoices (55 percent), paying invoices on time (53 percent), identifying trends in spending (53 percent) and spend forecasting (52 percent).
If your business is growing, the necessary AP tasks are only going to become more painful. Sixty-five percent of medium-sized businesses and 42 percent of small businesses report that paying invoices on time is an issue. Due to delayed and late invoice payments, nearly one-half of medium-sized businesses report experiencing late fees from vendors.
A Path to Automation
Aberdeen Group research shows that accounts payable departments with a high level of automation have more than four times as much visibility into their overall organizational cash flow as other businesses. Better yet, APQC research also points to the fact that leaders spend immensely less money per transaction vs. bottom performers—$4.98 vs. $12.77.
More savings, better control, an accelerated purchase-to-pay cycle, better spend management, les risk, and so much more—just some of the benefits of automating AP.
Learn more about the additional benefits of AP automation by reading the following articles:
- The Many Ways that Top Performing Accounts Payable Organizations Drive Savings
- Invoice Management Automation: A Tale of Two Companies
- Intro to InvoiceConnect: Half-Hour Demos for Concur Invoice + Intacct/GP
- Understanding the True Cost of Invoice Management
- Finding Inner Peace in Invoice Processing
Taking it Further
Automation is the first step, integration is the next. According to IOFM Research, seamlessly integrating electronic payments with an ERP system (rather than “talking” to the ERP system) provides the following benefits:
- Minimizes the need for initial and ongoing IT support.
- Shortens the learning curve through a familiar, easy-to-use operating environment.
- Eliminates potential invoice-payment bottlenecks.
- Tightens security between the invoice payment solution and the ERP platform.
- Reduces interchange rates through the use of Level-3 data
From nonprofits like the Atlanta Convention and Visitors Bureau to VC-backed technology companies like Code42 to MLB team scouting departments, Brittenford’s Concur connectors work for businesses of all sizes and missions. Learn more about InvoiceConnect and ExpenseConnect, designed to connect Concur Invoice and Concur TEM with Dynamics SL, Dynamics GP, and Intacct, and contact us for even more information.