ESPOO, Finland, July 7, 2010 /PRNewswire/ --
-- Accounts Payable Teams Are Missing Early Payment Discounts, Incurring Late Payment Fees and Reneging on Payment Altogether - Largely Due to Human Error
-- 35% of Accounts Payable Departments Have Not Paid Suppliers Due to Internal Finance Errors
-- 24% Know Their Own Organisation Has Not Been Paid Due to Customer/External Finance Mistakes
Weaknesses in finance processes are resulting in additional costs for businesses and even causing invoices to go wholly unpaid, according to a new report released today by Basware (http://www.basware.com). Speaking to 550 Accounts Payable (AP) departments around the world the report discovered that invoice and cross-departmental errors have caused 35% to leave suppliers unpaid, and 24% know that their own invoices have not been settled for the same reasons. Over a quarter (26%) of participating AP departments have even paid the wrong supplier when processing an invoice. With AP department inefficiencies largely attributable to human error, there is a clear need for appropriate controls and automation improvements.
Processing an average of 93,000 invoices per year, participants state that 7% of invoices contain errors, equating to more than 6,000 erroneous invoices per year for a typical enterprise taking part in the study. Lack of communication between AP and procurement departments is highlighted in the report as a cause of AP errors in a quarter (24%) of companies. Just 40% of invoices are based on purchase orders (POs), and where POs do exist, a third (32%) of finance departments have difficulty reconciling invoices against them.
When it comes to payment, in the last 12 months 30% of respondents have missed early payment discounts and 27% have incurred late payment fees. Despite this, 59% believe that the AP department has a positive effect on profitability.
With direct control over cash flow, finance professionals are under growing pressure to strengthen controls, drive out costs and to increase process efficiency. However, while 60% of AP survey participants think that increasing automation removes payment and accounting errors from the business, and 62% of respondents believe that automation can improve profitability, purchase-to-pay process automation tends to be partial and is not integrated. Automating finance and procurement processes not only results in reduced processing times and subsequent cost savings, it also provides improved control over who spends money and what they can buy - leading ultimately to improved business processes and capital management.
The report highlights the 'distance left to run' in achieving this vision of a modern and efficient AP department. 44% of respondents believe that e-invoices will fully replace manual paper-based invoice handling in the next 5 years. With so many still relying on manual, paper-based processes, much work needs to be done.
Basware's SVP of Global Marketing, Steve Muddiman commented on the report: "The Lost in Transaction survey shows that the engine room of corporate cashflow - the Accounts Payable department - is still far from the automated, error-free status it desires. According to our research, it takes companies 18 days on average to process an invoice through the AP department, by automating the process, this can be cut to a fraction of the time. Long processing times prevent companies from reaping the benefits of early payment discounts, and driving cost savings across the business. Companies cannot afford to leave these processes out in the wild but should consider system and process improvements as an ongoing evolutionary investment that bring order to chaos, and ensures finance is concerned with profit margins and not inhibited by avoidable margins of error."
For a full copy of the Lost In Transaction insight study, please visit http://www.basware.com/transaction.
About Basware
Basware is the global leader in purchase-to-pay solutions with more than 1,500 customers and 1,000,000 users in over 50 countries around the world. With Basware, organizations can reduce the cost of buying and paying for goods and services and gain visibility and control of their entire spending process by automating manual processes, from sourcing, contract management, purchasing and supplier collaboration to invoice automation. Basware solutions and services enable substantial cost reductions across businesses and deliver value by providing compliance and control, as well as fast return on investment. The solutions are distributed and implemented, either on site or as a service, in Europe, the US, and Asia-Pacific through an extensive network of Basware offices and business partners. http://www.basware.com
About the research:
The Lost In Transaction study was conducted for Basware by independent research company Loudhouse (http://www.loudhouse.co.uk/loudhouse.swf...) during May and June 2010. The study polled 550 Heads of Accounts Payable from organizations with between 1,000 to 50,000 employees.
Telephone interviews were conducted to present a proportional picture from across the globe, with 100 respondents surveyed in each of the USA, UK, Scandinavia and Germany, with 50 responses each from Australia, Benelux and France completing the total of 550.
A typical enterprise in the Lost In Transaction study:
- Has 11 full time employees involved in AP invoice processing
- Processes 93,000 invoices per year
- Takes 18 days to process an invoice (receipt to payment)
- 12% of invoice handling time is spent managing exceptions
- 1 in 5 (19%) of incoming invoices are e-invoices
- 7% of incoming invoices contain errors
- 58% of incoming invoices are based on POs
Octopus Communications (press), basware@octopuscomms.net, +44-845-700-655; Emilia Vaajoensuu, Communications Manager, Basware, emilia.vaajoensuu@basware.com
