Automation to drive use of electronic payments by businesses, MineralTree report

MineralTree, an account payable (AP) and payment automation solution provider, has released its annual State of Accounts Payable Report, a survey of over 1,300 finance executives and professionals in the middle market.

The report indicates progress for businesses in several areas:

• 91% of the businesses surveyed used payments cards at least once to make payments vs. just 51% in 2019. 80% made ACH payments at least once vs. 62% in 2019. 
• The total mix of electronic vs. paper-based payments continues to shift. Businesses report paying 56% of their invoices electronically and 44% via paper vs. 52% and 48% respectively in 2019.

More companies are automating their AP processes:

• 38% of the companies surveyed in 2020 have begun automating their AP processes, compared to just 24% in 2019.
• Another 20% expect to do so within the next two years.
• Company size plays a big factor in whether a company has automated or plans to—with 58% or larger companies having already implemented, compared to 30% of smaller companies.
• Of the 42% of larger companies that have not automated, 69% plan to automate, compared to smaller companies, where of the 70% who have not implemented, only half stated they have plans to automate.
• Key areas of focus for automating include invoice capture and coding, API-level ERP connections, and fraud protection/segregation of duties.

Automation is a big driver for electronic payments:

• For companies that have automated their account payable processes, 21% of payments made are electronic vs. only 16% for those companies that have not automated. This gap is consistent with the previous year’s report.

There are also a few key areas for improvement for middle-market business:

Fraud remains a persistent issue

• 57% of respondents experienced fraud or received a fake invoice. This is versus 59% in 2019 —not nearly enough improvement. 

Manual AP costs continue to be grossly underestimated

• 90% of the cost to manually process and pay an invoice is overlooked.
• Respondents estimated a median cost of USD 2 per invoice vs. a real cost of USD 20 per.
• A company processing 500 invoices per month/6,000 per year is spending roughly USD 120,000 a year to do it manually vs. their cost estimate of only USD 12,000.
• Invoice preparation, manual sorting and entry, approvals, errors, duplicate payments, and late payment fees are some of the primary cost drivers. 

Manual AP processes make remote work difficult for many involved in payables operations:

• The coronavirus crisis has created challenges for finance teams related to their ability to work remotely.
• 43% of respondents report still needing to go to the office in some capacity to perform their job.
• Of those, 29% reported not being productive or as productive as they had been prior to the pandemic.