Research into accounts payable (AP) automation by global organisation APQC and OpenText, has found a significant shift in the way finance executives now assess the value of accounts payable (AP) process improvement. The International Accounts Payable Professionals (IAPP) served as the research partner for the data collection.

The survey found that two-thirds of respondents expect to look beyond labor costs when they size up potential AP process improvement opportunities.

“APQC wanted to identify the ways in which people are adjusting their yardsticks for measuring the value of financial process improvement—in this case, AP-related processes," said Mary Driscoll, senior research fellow in financial management for APQC.

"Our contention was that CFOs and controllers who do not assess the fully burdened costs of payables processing are working with a false sense of security. These same CFOs and controllers assume they perform efficiently when in fact they overlook significant opportunities to reduce costs, improve cycle times, and generate business insights from data flowing across the procure-to-pay process.”

Key improvement targets include:

1. AP automation that leads to significant increases in process productivity and reduced cycle-times. The survey found that top performing organizations had 5 percent or less of invoice data entered manually whereas low performers reported 90 percent or more of invoice data entered manually, and highly automated organizations take 8 days to approve and transmit payment after an invoice is received, versus 16 days for organizations that are not highly automated;
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2. Fees paid to third-party auditors who retrieve duplicate payments are another prime target. Duplicate payments are often linked to errors introduced by manual processing—basic human errors—that undermine efforts to manage working capital;

3. Other opportunities include accelerating the approval of invoices to capture lucrative early payment discounts and negotiating new discounts.

According to Tom Walker, Portfolio Manager SAP Accounts Payable Solution, OpenText, “The opportunistic economy has created a sudden interest in AP processing as a significant venue to reduce costs. In the past, as organizations built business cases for AP transformation, they looked to hard savings achieved with labor reductions. No longer is AP optimisation only labour savings; today, it is true business process transformation that reduces total process cost while increasing control and compliance.”

“Today’s financial operations face continued downward pressure on costs and increased demands to improve working capital management,” said IAPP-IARP-TAWPI President and CEO Tom Bohn. “The implications for AP professionals are a relentless focus on cash, efficiency, and productivity, and the expectation that they be an active business partner in their company’s financial objectives. To accomplish these objectives, AP professionals must clearly understand their costs.”

Download a complimentary copy of the study findings HERE.

Another recent study titled “Global Trends in Automated Data Capture in AP”  demonstrates the extent to which automation, particularly advanced data capture, addresses universally-recognised priorities in accounts payable.  Sponsored by Brainware and conducted by International Accounts Payable Professionals (IAPP), International Accounts Receivable Professionals (IARP) and The Association for Work Process Improvement (TAWPI), this report analyses and breaks down the responses submitted by accounts payable professionals across six continents.

Among the report’s findings:

* Respondents who use automated data capture technology in their AP departments report significantly lower costs to process their invoices than those who don’t;

* More than half of respondents from companies headquartered in Europe indicated that it takes their organization more than 15 days to pay an invoice;

* More than 80% of respondents report that automation technology has resulted in faster invoice processing cycle times;

* Nearly two-thirds of respondents reported that their number of errors has fallen since they deployed automated data capture. 

Respondents are facing more stringent reporting, compliance, and audit requirements regardless of where their company is based.

"At a time when AP professionals are under tremendous pressure to improve operations efficiency and effectiveness, our study proves that automated data capture can help reduce invoice processing costs, while eliminating errors and speeding turnaround," commented IAPP-IARP-TAWPI Vice President of Research and Business Development Mark Brousseau.  "It's for these reasons that we expect automated data capture to experience tremendous growth as the economy improves."