The study shows that a large majority of companies are still handling essential supplier payment processes and best practices by hand, leading to greater errors as businesses grow and expand globally.
Some key findings from the report include the fact that manual effort remains the primary method for getting accounts payable done. An overwhelming majority of respondents indicated standard AP processes were either completely manual, mostly manual or 50%+ manual for the following processes: 60% for invoice collection; 61% for payment approval routing; 58% for remittance; 61% for supplier communications; 78% for payment issue resolution.
More than that, according to the study, accounts payable and supplier payment operations best practices are either completely manual, mostly manual, or 50%+ manual for the following: 75% for supplier onboarding; 64% for tax form collection and validation; 50% for tax withholding and reporting; 66% for blacklist/AML compliance; 66% for payment reconciliation;
80% of companies that remit over 500 payments a month stated a payment error rate of 1% or higher. 44% had an error rate of over 3%. To put this in perspective, a 3% error rate on 500 payments a month is 15 errors, which can lead to 180 hours or over USD 24,000 spent annually on payment resolution.Time spent on the manual invoice-to-payment process is extensive. 27% of respondents spend over 15 hours a week. 20% spend from 10 to 15 hours per week. And 26% spend from 5 to 9 hours per week.
For companies that send payments globally to more than 6% of their suppliers, 47% had an error rate of over 3%. They also spend more time (31% spend over 15 hours a week) and headcount (34% had 10 or more staff) to manage payments.
AP friction limits the ongoing improvement opportunities for organizations. If the accounts payable function was more automated, many professionals would spend more effort on strategic initiatives. 65% say they would focus on optimizing business productivity across departments. 55% say they would work more on cash flow and business analysis.
The survey, commissioned by Tipalti, was conducted and certified by TechValidate, a research organization, in February 2016. Responses were gathered from accounting and finance professionals from a wide array of company sizes and positions at for-profit businesses in the United States. Questions were related to supplier payment processes, employment of financial control best practices, and the current effort associated with the AP operation. The survey also polled respondents on the hindrances to adopting AP automation and the post-adoption aspirational goals for the organization.
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