Pay it Forward -- Quantifying Payables and Invoice Automation Returns

Even though I've long been skeptical of Aberdeen's approach to survey quality control relative to Hackett, AT Kearney, AMR Research and other firms that conduct benchmarking and research studies in the procurement, finance and supply chain areas, their latest research on E-Payables Invoice Receipt and Workflow confirms and quantifies a number of other observations I've heard from other firms and consultants of late focusing on the area. To wit, "Best-in-Class enterprises are noted for their superior performance across the scope of these two major accounts payable metrics. These top-performing enterprises have actively reduced their overall invoice-processing costs by nearly 91% (when compared to Laggard organizations), as well as lowered their invoice cycle time by nearly 92%."

If you dig below the high-level findings of this particular study, you'll see many of the same observations that analysts have been making for years regarding electronic invoice present and payment (EIPP). Perhaps most important here is the degree of technology automation that leading companies deploy. Aberdeen's latest numbers suggest that 67% of best-in-class companies use "complete A/P automation" relative to 18% overall (when surveyed on usage of EIPP, respondents reported 63% and 21% respectively). I suspect there is room for interpretation here regarding what solution elements specifically comprise each, but since I did not participate in the survey, I'm not sure how the questions were phrased.

Regardless, even if Aberdeen's information is only directionally accurate, it's clear that leading procurement and finance organizations are making significant investments to automate the invoicing process. Hackett data, which I can vouch for without hesitation, suggests that "world-class" organizations -- who spend approximately twice as much on buy-side technology as average performers -- reduce their PO processing cost by nearly two-thirds while also realizing similar benefits when it comes to automating the invoicing management process. Which is further proof that the right set of underlying technologies is essential to uncover savings from managing the invoice receipt and workflow process.

- Jason Busch