Canadian Packaging

Does purchase-to-pay pay off?


August 4, 2010
by Purchasingb2b Staff

Do purchase-to-pay systems have a measurable effect on accounts payable departments?

According to a new study conducted by Forrester Consulting on behalf of Basware, the answer is yes.

The study examined accounts payable departments’ performance in terms of how many invoices each employee processed annually. In doing so, researchers found a “significant disparity” between accounts payable departments that use paper-based processes and those that use automated processes and e-invoicing.

Still, many companies continue to depend on paper. A full 47 percent of organizations surveyed said that more than half of their invoices come in paper form. This, researchers found, results in increased errors, delays and costs.

By contrast, companies that implemented purchase-to-pay systems—combining invoice automation with electronic invoicing and e-procurement within organizations—were twice as likely to achieve invoice processing excellence and maximize straight-through processing. 

“The worst-performing accounts payables departments don’t seem to realize how far they lag behind their peers,” the study reads.

“In contrast, 60 percent of those in the top quartile saw further scope for improvement. The least-efficient departments can’t move forward until they realize just how far they lag behind their peers.”

Other findings from the survey:

•    Finance managers with pan-division responsibilities are more able to invest in better technology and processes than those operating at a business-unit level;

•    Persuading suppliers to send invoices electronically—and offering them incentives to do so—correlates strongly with excellent performance; and

•    There is great disparity in the productivity of the companies surveyed: 18 percent process more than 40,000 invoices annually per full-time employee, while 25 percent need one full-time employee to process 4,000 invoices or less per year.

“Organizations are paying dearly for poorly performing processes, with each invoice costing more than $50 to process at the organizations in the poorest performing quartile,” said Steve Muddiman, senior vice-president at Basware.

“We believe these study findings reflect the evidence we have seen in our own customer base. Integrated purchase-to-pay processes, combined with best practices such as departmental collaboration between finance and procurement, enable organizations to transform their accounts payable departments to top performers, delivering cost savings and ultimately boosting the bottom line.”