Time costs money; best in class level efficiency saves both.
In the business world, this isn’t just a mantra for motivation. It’s a cold, hard fact that companies deal with every single day. In order to compete in the modern world, things must be done fast and done right the first time.
In accounts payable departments, the effect of doing things the right way can easily be measured, and they are. According to a 2017 Ardent Partners white paper, the difference between AP departments that qualified for best in class status, and all the rest, was staggering. For those of you who did not make it to the top, here are the results for six criteria of which you should pay close attention:
- Cost to process a single invoice. The best in class averaged $2.74 for each invoice. (They could have reduced that average even more if they’d used iPayables’ InvoiceWorks ®.) And how did you fare? Your average was a whopping $15.02!
- Time to process a single invoice. The best in class averaged 3.5 days. You, on the other hand, averaged 12 days – nearly two full weeks!
- Invoice exception rate. Best in class scored 11.5%; you came in at 19.9%.
- Percentage of invoices processed “straight through.” Best in class averaged 58.4%, while the rest of you averaged 18.1%.
- Percentage of suppliers that submit invoices electronically. For best in class recipients, the average percentage of suppliers who submitted their invoices electronically was 58.1%. The rest of you averaged only 18.9% of suppliers.
- Percentage of invoices linked to a purchase order (PO). Best in class, 71%. The rest of you, 21.8%.
Source: © Ardent Partners - 2017
So, you see, I wasn’t exaggerating when I said the difference was staggering. But don’t get me wrong. I’m not throwing these stats around to condemn your AP department. They’re meant to wake you up. Many of you have a competent, hard-working AP staff. What you’re probably lacking are the right tools to get the job done in this brave new world of hyper-speed business practices.
Probably the most telling statistic in the survey is number 5, the percentage of suppliers that invoice electronically. Notice how those numbers are almost identical to the ones found in number 4 (invoices processed “straight through”)? That’s no coincidence. Neither are any of the other numbers. When an AP department relies on AP automation, like the InvoiceWorks® system offered by industry leader iPayables, everything works more efficiently and more effectively. Labor costs shrink, invoices get routed to where they’re supposed to be, and you and your suppliers are happier. All with a few mouse clicks.
Electronic invoicing is now. Paper invoicing is the past. With AP automation like InvoiceWorks®, you’ll move to the head of the class in no time.