PayStream Advisors survey shows Increasing Adoption of Automated Workflows in Invoice Processing
Automating the invoice approval process is the next logical next step for companies that are already reaping the benefits of front-end electronic invoice systems. Organizations that have experienced successes through employing digital imaging are seeing visible improvements and are actively moving towards further AP automation.
Research conducted by PayStream Advisors confirms these trends and notes that automation to date has been operations driven, with quicker approval of invoices being the main cited benefit. Companies in the survey also experienced lower processing costs and increased productivity.
Automated workflow solutions in the accounts payable (AP) arena are maturing as the share of companies employing or deploying systems rapidly approaches 50 percent. Over and above operational improvements companies are enjoying broader benefits which include:
- improved visibility over liabilities
- better regulatory compliance and
- reduction in interest and late payment penalties.
When three quarters of AP professionals surveyed say they’ve implemented an approval workflow solution or are at least considering it, it is an idea whose time has come, especially when you consider that the naysayers – those who didn’t have any plans to implement a workflow solution have dwindled from 36 percent, to 27 percent in just a year.
Glowing reports from early adopters, who report across-the-board workflow improvements, particularly quicker invoice approvals, increased employee productivity, and lower processing costs are one reason for the rapid decline in skeptics.
Benefits of Automated Workflow
Selling the idea of invoice automation to finance executives and convincing them of the return on investment in approval workflow solutions should take heart from PayStream’s 2011 invoice automation research results. Not only did 75 percent of all adopters report quicker invoice approval, but many were able to increase employee productivity and lower processing costs. In addition, 30 percent reported improved visibility of liabilities, 18 percent reported a reduction in late payments and penalties, and 15 percent reported better regulatory compliance. That should turn heads in the C-Suite.
The PayStream Advisors survey did not ignore the challenges associated with implementing automated workflow systems to support the paperless process. Barriers to success that have to be overcome included :
Internal Business Practices. Invoice automation heralds a tremendous change in the way buyers and suppliers conduct business. There will always be some resistance to change and it may be necessary to manage perceptions that current paper-based processes are working well, if not efficiently.
Technical Challenges. Most applications on the market today integrate easily with systems on both the buyer and supplier sides, resulting in secure and seamless data transfer and more efficient workflows but careful planning is advised.
Supplier Resistance. If getting internal buy-in is difficult, getting your suppliers to submit invoices electronically may need personal handholding to enable them to understand the benefits to them, like the attraction of being paid on time.
Impact of Company Size
Large companies, with their greater resources, not surprisingly lead the way. Mid-sized companies have automated apace with their larger peers, except when it comes to back-end imaging. Small companies, where AP personnel tend to wear a variety of hats, are showing a disproportionate fondness for and were quick to embrace automated workflow solutions.
Vantage has partnered with Bill.com to help small and mid-sized businesses efficiently manage their day-to-day bill payment and invoicing processes. Bill.com customers are saving 50-75% of the time and cost of managing their financials by going paperless.
Classification by Company Size
PayStream Advisors’ research classified companies based on annual revenues to identify whether size had any effect on the functioning of the AP department as well as the organization’s adoption of technology. Organizations that had less than $500 million in revenues were classified as Small, those with revenues between $500 million and $2.5 billion were Medium and finally companies with revenues over $2.5 billion were categorized as Large.
Almost two thirds of survey participants (63 percent) were from Small companies, Medium companies comprised of 23 percent of the population, with Large companies forming the remaining 14 percent.
Invoice Processing Costs
Although it is hard to accurately calculate the average cost of processing an invoice the benchmark is around $15 per invoice for manual processing. Only about half of the companies in our survey were able to accurately answer this question. Of those that did, it was not surprising to find a considerable economy of scale between big and small companies. More surprising was the fact that big and medium-sized companies were statistically identical, this may be because they are at similar points in the invoice automation process. Small companies, which admittedly have the most room for improvement, showed the biggest year-over-year drop in average invoice processing cost, although averages dropped across the board.
Findings from PayStream Advisors most recent research on invoice automation and workflow. Download the full eReport. For more information on eInvoicing, download PayStream’s recently updated complimentary eResearch on the subject from our website HERE.