APQC and OpenText Research Reveals Finance Executives Looking Closely at AP Automation to Reduce Costs, Improve Cycle Times
Study Indicates Organizations Are Now Willing to Look Beyond Labor Costs When Assessing Process Improvement
(Houston, Texas – February 1, 2011) – APQC, the leading benchmarking and best practices research organization, and its research partner OpenText, a global enterprise content management leader, today released survey results indicating a significant shift in the way finance executives now assess the value of accounts payable (AP) process improvement. The International Accounts Payable Professionals (IAPP) served as the research partner for the data collection.
The survey found that two-thirds of respondents expect to look beyond labor costs when they size up potential AP process improvement opportunities.
“APQC wanted to identify the ways in which people are adjusting their yardsticks for measuring the value of financial process improvement—in this case, AP-related processes," said Mary Driscoll, senior research fellow in financial management for APQC. "Our contention was that CFOs and controllers who do not assess the fully burdened costs of payables processing are working with a false sense of security. These same CFOs and controllers assume they perform efficiently when in fact they overlook significant opportunities to reduce costs, improve cycle times, and generate business insights from data flowing across the procure-to-pay process.”
Key improvement targets include:
- AP automation that leads to significant increases in process productivity and reduced cycle-times. The survey found that:
- Top performing organizations had 5 percent or less of invoice data entered manually whereas low performers reported 90 percent or more of invoice data entered manually, and
- Highly automated organizations take 8 days to approve and transmit payment after an invoice is received, versus 16 days for organizations that are not highly automated.
- Fees paid to third-party auditors who retrieve duplicate payments are another prime target. Duplicate payments are often linked to errors introduced by manual processing—basic human errors—that undermine efforts to manage working capital.
- Other opportunities include accelerating the approval of invoices to capture lucrative early payment discounts and negotiating new discounts.
According to Tom Walker, Portfolio Manager SAP Accounts Payable Solution, OpenText, “The opportunistic economy has created a sudden interest in AP processing as a significant venue to reduce costs. In the past, as organizations built business cases for AP transformation, they looked to hard savings achieved with labor reductions. No longer is AP optimization only labor savings; today, it is true business process transformation that reduces total process cost while increasing control and compliance.”
“Today’s financial operations face continued downward pressure on costs and increased demands to improve working capital management,” said IAPP-IARP-TAWPI President and CEO Tom Bohn. “The implications for AP professionals are a relentless focus on cash, efficiency, and productivity, and the expectation that they be an active business partner in their company’s financial objectives. To accomplish these objectives, AP professionals must clearly understand their costs. Through this study with APQC and Open Text, we have provided them with a roadmap for doing just that.”
APQC is a member-based nonprofit and one of the world’s leading proponents of knowledge management, benchmarking, and best practices business research. Working with more than 750 organizations worldwide in all industries, APQC provides organizations with the information they need to work smarter, faster, and with confidence. Visit www.apqc.org or call +1.713.681.4020 and learn how to make best practices your practices.
OpenText, a global ECM leader, helps organizations manage and gain the true value of their business content. OpenText brings two decades of expertise supporting 100 million users in 114 countries. Working with our customers and partners, we bring together leading Content Experts™ to help organizations capture and preserve corporate memory, increase brand equity, automate processes, mitigate risk, manage compliance, and improve competitiveness. For information, visit www.opentext.com.
International Accounts Payable Professionals (IAPP) and its sister organizations, International Accounts Receivable Professionals (IARP) and The Association for Work Process Improvement (TAWPI), serve as a global voice, chief advocate, recognized authority, acknowledged leader, and principal educator for people in financial shared services, with a particular focus on accounts payable, accounts receivable, and automation. Combined, the associations have more than 6,000 members in 40-plus chapters throughout the United States, Canada, and the United Kingdom.
# # #