It is with great pleasure that Ardent Partners announces the publication of its latest state of accounts payable (AP) research report—“ePayables 2015: Higher Ground.” Like the annual reports that came before it, the 2015 ePayables report focuses on the state of the AP function as well as assessing how AP teams leverage ePayables solutions to improve business results and offering up Best-in-Class metrics that allow readers to benchmark their own operations against top performers. (The report is available for download here, here, here, here, and here.)
AP’s Two-Year Goals – Reduce Operational Costs
The AP team can drive significant value to the wider enterprise through a variety of areas. For example, visibility into invoice and payment data can be leveraged in Treasury’s cash management activities and used to craft richer financial forecasts. On the procurement side, greater visibility into invoice data can be used to inform supplier performance data—if a supplier causes numerous exceptions or has any other AP-related issues, procurement needs to know.
Perhaps the most direct way that AP can drive value, however, is through a reduction in operating costs. In fact, 33% of respondents to Ardent’s ePayables 2015 survey noted that reducing operational costs was one of their goals for the next two years. Reducing operational costs can be key to the financial health of an organization; consider that the average enterprise experiences a per-invoice processing cost of $13.47, with an invoice processing cycle time of 11.4 days. This is fairly expensive on a per-invoice basis, especially when the Best-in-Class experience a per-invoice cost of $2.96—a lower average cost of nearly $11.
That $11 savings may not seem like much on a per-invoice basis, but extrapolate that number out to 5,000 or so invoices, and it becomes immediately apparent that a reduction in per-invoice processing costs can save sizeable amounts of money ($52,550 in that example). That cost savings could then be used to fund other operational tasks, leveraged as part of Treasury’s cash management strategies, or used to fund early payment discounts to save the enterprise even more capital. No matter which way the concept is examined, reducing operational costs—likely through greater automation—can drive real value to the enterprise.
Final Thoughts
AP can drive enormous business value to the enterprise through a variety of pathways—greater financial intelligence among them—but one of the simplest methods involves a reduction in operating costs. Whether this is done through greater automation or a concerted effort to improve exception handling, AP teams at many enterprises are focused on shrinking what their operations cost. This provides value to the enterprise, and can result in capital that can be used in other functional areas. Overall, this is a good thing for AP and a good thing for the enterprise.
Check out these related articles for more:
ePayables 2015: AP’s Top Challenge in 2015
ePayables 2015: AP’s Two-Year Goals – Automate More AP Processes
ePayables 2015: AP’s Role in Collaborative P2P
ePayables 2015: Which AP Technologies Hold the Most Interest?
ePayables 2015: What Causes Invoice Exceptions?
ePayables 2015: The Three Most Common Accounts Payable Technologies
ePayables 2015: What is the Biggest ePayables Priority in 2015?
ePayables 2015: 3 Important Accounts Payable Goals for the Next Two Years
ePayables 2015: How Improved Exception Handling Can Drive AP Performance
ePayables 2015: AP’s Top 3 Priorities in 2015
ePayables 2015: Moving From the Tactical to the Strategic
ePayables 2015: Reaching for “Higher Ground” in Accounts Payable
The ePayables 2015: Higher Ground Report is Now Available
