Large and mid-sized companies continue to pay a hefty price for mismanaging their invoice payment processes, so concludes a comprehensive research report made available by Captiva Software Corp., a provider of enterprise input management solutions.
The independent study conducted by Byline Research estimates the annual cost of invoice processing inefficiencies to U.K. businesses to be in the hundreds of millions of pounds. Although the study is focused on U.K.-based companies, its findings have significant implications for businesses in America and other parts of the world.
The survey of 50 U.K.-based utilities, retailers and manufacturing companies found that these firms are admittedly struggling to keep up with the deluge of paper invoices they receive. Of the average 19,000 invoices received per month at each company, one in four are paid late and one in five contain anomalies that delay payment, increase administration costs and/or compromise the accuracy of reported corporate financial information. Some companies complain that such anomalies are present in more than half of the invoices they receive.
"The three foremost objectives pertaining to invoice payment processes identified by the financial executives surveyed are cost control, good relations with suppliers and the value of accurate and timely business information," said Mark Lewis, Captiva's vice president of Europe, Middle East and Africa operations. "These professionals say these priorities are not, and cannot be, satisfied by today's labor-intensive manual paper processes. Consequently, by their own admission, they run highly inefficient accounts payable operations, pay their bills late and cannot pull together the resources they need to manage their supply chains effectively."
The survey found that, despite the promise of electronic data interchange (EDI), 96% of invoices still arrive on paper and are manually keyed into corporate finance systems by accounts payable (AP) staff. Because of the problems inherent with paper-based AP processes, some companies admit to settling as much as 95% of their transactions late.
Conversely, the most efficient businesses surveyed were nearly six times as productive than the average firm in terms of the number of invoices processed per AP employee, suggesting a substantial potential for cost savings or for the redeployment of finance staff to more useful roles when best practice technology solutions are utilized. The report illuminates, however, that staffing inefficiencies account for only a fraction of the sums wasted by inefficient invoice processing. Much more dramatic cost penalties are incurred by late payment of invoices from major suppliers, failure to qualify for discounts and the inability to negotiate improved terms.
The report urges large companies to view the problem not simply in terms of what they stand to lose through inefficiency, but in terms of what they could gain from improved processes. For example, if a large firm could negotiate a 2% discount for paying its bills on time or early with just 10% of its suppliers, the savings would be quite substantial.
To obtain a copy of the report, "Payback Time: Invoice Processing & Automation," go to http://www.captivasoftware.com. Interested parties may also call Tanya Williams (U.K.) at +44-1483-460-564 or Rob Jensen (U.S.) at 858/320-1255.
For more information, visit www.captivasoftware.com.