Key takeaways from Hyland’s 2018 State of Accounts Payable Report: Part 1

Technology plays an essential role in nearly all business operations today, and accounts payable (AP) is no exception. Yet despite investing hundreds of thousands of dollars in enterprise resource planning (ERP) applications or process automation tools, AP departments still face a number of challenges that affect the efficiency and accuracy of invoice processing. Physical paper documents, manual data entry, invoice exceptions, data errors and discrepancies continue to delay the procure-to-pay cycle.

To more closely examine what invoice processing looks like today, Hyland recently published the 2018 State of Accounts Payable Report based on a survey of 200 AP professionals. The results reveal not just the main challenge AP departments are facing, but also what attributes – like process visibility and control – are most valued in AP operations.

The keys to an automated AP kingdom

Key takeaways from the report include the following:

AP organizations need to get on the automation bandwagon

The concept of process automation is not new and automation technology is quickly becoming the norm among AP organizations. Nearly 2/3 of survey respondents claim to be fully – or mostly – automated. It’s easy to see why. AP automation eliminates many of the challenges that AP professionals say delay their processes, like manual data entry and the associated errors.

Additionally, fully or mostly automated AP organizations have lower DPOs (17 days on average compared to 25 days for manual processing) and feel more confident about processing higher volumes of invoices, according to the survey.

Invoice processing delays have real consequences

Inefficient invoice processing is more than just an annoyance for AP and finance departments. Manual, paper-based processing, errors and exceptions can all lead to payment delays with very real and very negative impacts on the business overall.

Hyland asked AP professionals what negative issues their organizations had experienced in the past 12 months as a result of process delays. Respondents cited the following as the top three consequences:

  • Stress on the AP team (27%)
  • Delayed delivery of goods and services (25%)
  • Damaged vendor/supplier relationships (20%)

Further, invoice processing delays affect financial operations beyond accounts payable. More than half of AP organizations say not processing invoices by their dated payment period impacts their accruals. When invoices are not paid in the expected period, it can affect the dollars accrued for the next period and make cash flow needs less predictable.

Visibility matters

AP professionals highly value the ability to view basic information about each invoice (PO number, vendor name, amount, etc.). But visibility into aggregate information about all invoices in process, as well as corresponding documents, is just as important.

Eighty percent or more of survey respondents ranked visibility into the following details as valuable or very valuable:

  • Corresponding documents for each invoice (e.g. packing slips)
  • Total volume/dollar amount of open invoices by vendor/supplier
  • Total volume/dollar amount of open invoices by month
  • Total volume/dollar amount of open invoices by process stage/status

AP professionals also want more insight into process performance metrics, such as time-to-payment, time-to-invoice approval, and workload per AP employee. These metrics help AP managers better evaluate their current processes and target any process bottlenecks to further improve AP operations.

Without data and process visibility, AP departments are at risk of increased confusion, mistakes and further delays that have real costs to the organization. Survey respondents stated the greatest financial or operational risks of low AP visibility are late and duplicate payments, billing the wrong department and damaged vendor relationships.

Choosing the right automation solution

What the report makes clear is this: Organizations that have not implemented some type of AP automation solution are in the minority and putting themselves at risk of even greater invoice processing delays and challenges. However, when evaluating solutions, AP organizations should prioritize those that provide the visibility their teams so highly value.

Many AP organizations have been leaning toward enterprise content services solutions to automate their operations, which is a smart move. Content services platforms feature a flexible set of capabilities, such as intelligent data capture, workflow automation and ERP integration that are configurable to specific organizational needs.

Most importantly, the robust reporting components of content services offer clear visibility into aggregate data about invoices in process. Metrics like the total dollar amount owed to a supplier, the number of invoices out for approval and performance indicators such as the time to approval and workload per employee help AP staff better predict upcoming cash flow needs and proactively address delays.

For more details, download the full 2018 State of Accounts Payable Report here.

Danielle Simer is a marketing portfolio manager at Hyland. Her mission is to share best practices and evangelize the power of enterprise content management (ECM) as a tool to automate paper-based processes and improve operations across accounting and finance, human resources, and contract management. Danielle joined Hyland after more than six years with a research and advisory firm devoted to helping senior executives manage their departments and teams more effectively. She received her bachelor’s degree from The Ohio State University and her MBA from Georgetown University’s McDonough School of Business.
Danielle Simer

Danielle Simer

Danielle Simer is a marketing portfolio manager at Hyland. Her mission is to share best practices and evangelize the power of enterprise content management (ECM) as a tool to automate... read more about: Danielle Simer