Cost Reductions and Visibility are Driving e-Invoicing

Vice President, Marketing, Basware, Inc.

Following is the third blog in a series based on a discussion between Bob Cohen, Basware VP North America, and Andrew Bartolini, Chief Research Officer, Ardent Partners and author of the recently published study e-Payables 2014: The Quest.  During their conversation, a range of purchase-to-pay trends were discussed, including e-payments, business networks, and social, mobile and cloud enablement. This blog focuses on e-invoicing. 

Bob Cohen:   How committed are companies to implementing AP automation and e-invoicing?

Andrew Bartolini:  For many organizations, the AP department is one of the last bastions of manual processes.  It has not yet fully realized the benefits that automation delivers in driving business value. However, there are a lot of market forces and innovation continuing to push this marketplace forward.

Bob Cohen:   What is the primary motivation companies have for implementing  e-invoicing?

Andrew Bartolini:  Ardent Partners conducts a large annual market research effort, focused on the AP space each year and our research continues to show that cost reduction remains by far the top priority for AP organizations.  And it’s a warranted priority because our research has shown that there is a huge  difference in the  cost and time to process an invoice between "best-in-class" and typical organizations.  When you take that cost differential and apply it to thousands, tens of thousands or hundreds of thousands of invoices, organizations with leading AP departments derive a substantial competitive advantage  from their AP operations.  

Bob Cohen:   What other factors are driving e-invoicing?

Andrew Bartolini:  In addition to reducing processing costs, companies are looking for better visibility into what’s happening in AP. This will enable AP to engage with other stakeholders like Treasury, so the company can make better cash management decisions – as well as procurement, so the company has a better understanding of how suppliers are performing, and how supplier relationships are being facilitated. Additionally, while external stakeholders, like the suppliers themselves, gain and benefit tremendously from being able to easily see the status of an invoice, it benefits AP as well.  The average AP department spends more than a third of its time responding to internal and external inquiries.  Simply answering the question, "What’s the status of an invoice?" in a paper-based, manually driven AP department, is difficult and time-consuming.  The ability to respond with accuracy is also very difficult because when manual AP departments are spending more than a third of their time responding to those types of inquiries, the answers they come back with are delayed, and the information is not going to be very accurate

Bob Cohen:   Are companies looking at e-invoicing and e-payments synergistically?

Andrew Bartolini:   E-invoicing and electronic payments are inextricably linked.  Until recently most companies did not share our view, but more are starting to each year as we discovered in our recent report, E-Payables 2014: The Quest.  Five years ago, when we talked to finance leaders, controllers or AP managers about their processes, they tended to focus only on the front end of the process: managing the inbound invoice. They asked questions such as, what are we doing with the paper that’s coming in today? How do we digitize that?  How do we get to e-invoicing?  What’s the roadmap to drive value on the front end?   Today, organizations are thinking about the entirety of the AP transformation process from invoice receipt to processing to payment. Many are finally asking themselves if they are paying their suppliers in an efficient and effective way.  

 

To download the complete Ardent Partners’ report, e-Payables 2014: The Quest, click here »