Study shows key trends in e-payables, best strategies

Report shows surge in e-Invoicing adoption, recommends roadmap, automation, key metrics to achieve AP excellence, savings

August 19, 2014
by PurchasingB2B Staff

STAMFORD—The adoption of e-invoicing and business commerce networks is expected to surge in the coming years, according to a recent report by Ardent Partners entitled e-Payables: The Quest. The firm polled financial executives across the globe to reveal that the top priority of AP organizations is to reduce costs, while improving AP reporting and analytics, as well as gaining visibility into payment data follow closely behind.

The report was supported by Basware, a provider of e-invoicing and purchase-to-pay solutions

According to the study, while 29 percent of companies are currently using e-invoicing, adoption is expected to increase significantly, with 55 percent of organizations planning to implement it within the next two years.  Similarly, the 19 percent of companies currently using business networks to submit e-invoices and e-payments is expected to grow to 41 percent within the next two years.  The benefits companies will gain from transacting, collaborating and communicating with trading partners digitally is driving this growth.

The report underscores that a connected purchase-to-pay process and automation drive key value throughout the AP organization.  It identified several key performance benefits that differentiate best-in-class organizations, including:

  • Performance: There is a big discrepancy between best-in-class organizations and their peers in AP performance. Best-in-class organizations can process an invoice in 3.7 days compared to 17.1 days for other organizations. The average processing cost is $2.42 per invoice for best-in-class organizations, which is more than seven times lower than other organizations.
  • Straight-through processing: The average best-in-class company processes half (50.3 percent) of its invoices without human intervention, compared to slightly more than 10 percent for other organizations.

“AP’s potential to positively impact working capital and the drive savings across the purchase-to-pay process stand as two catalysts to launch a transformation initiative,” says report author, Andrew Bartolini, chief research officer at Ardent Partners. “The level of performance that best-in-class enterprises have been able to achieve in these areas is a testament to the potential available to other AP operations. The time for action is now. The untapped opportunities that exist within greenfield AP operations are causing them to be scrutinized more than ever before.”

Some of the  key strategies for achieving excellence in AP and e-payables that the study identified, include:

  • Create a roadmap for AP transformation;
  • Sell the vision to stakeholders and suppliers;
  • Establish or enhance key performance indicators. The four key metrics AP departments should measure include: efficiency, connectivity, cash management and compliance; and
  • Map AP metrics to top business objectives.