Nearly 4 in 5 financial leaders in the US and UK believe their companies’ accounts payable (AP) operations cannot sustain continued growth, with many blaming inefficiencies due to the use of manual processes, which they also believe they are leading to fraud and risk exposure.
The survey of 500 financial leaders in both countries commissioned found that 43% of end-to-end AP functions, including billing and payments, are manual or paper-based. This leads the average finance team to take up to an hour to process a single vendor invoice, 11 days to close monthly accounts, and 13 days to close quarterly accounts, the survey said.
This delay equates to manual AP processes that take more than half (53%) of the financial time in an average week. As a result, nearly a quarter of supplier bills are paid late, and nearly 4 in 5 financial leaders (78%) are concerned that staff productivity and morale are suffering from overwork.
Additionally, about four-fifths of the financial leaders surveyed (82%) indicated outdated AP processes and the risk of fraud they create as a major challenge to their AP processes.
Nearly a third of financial leaders expect AP obstacles to stop their business growth if they continue, and 4 in 5 say finance can only drive growth when AP inefficiencies are at their lowest. More than four-fifths of respondents (83%) said automating the AP would allow teams to focus more time on strategic growth initiatives.
The May edition of PYMNTS AP Automation Tracker®, a collaboration with Beanworks, examines how businesses are using AP Automation to simplify invoice processing. It also explores how AP automation could pay off companies in terms of employee retention, worker productivity, and cost savings along the way.
Here’s more from the May 2022 edition of AP Automation Tracker:
A recent report based on a survey of 1,200 UK firms, including 173 construction companies, found that nearly two-thirds of contractors who have noticed a change in customer interactions since the start of the COVID-19 pandemic more than two years ago they cited slower payments.
More than 1 in 4 companies said it takes their customers more than 30 days to pay off pending invoices, with a third of indebted customers citing cash flow pressures and late payments from their customers as reasons for the delays.
More than half of the companies that responded were not members of the Prompt Payment Code, a voluntary 2008 framework created to set standards for payment practices between companies. The construction sector is characterized by volatile prices due to fluctuations in labor, lumber and energy costs. A similar report suggested that improving forecasting processes and digital capital management tools could help management teams reduce the risk of capital strain due to late payment.
Meanwhile, nearly half of executives in a recent Deloitte poll said their biggest concerns include managing their companies’ working capital over the next year. More than a third of 1,700 executives said they would keep it a “top” priority in the year ahead, while 15% would make it a “top” priority.
One-third of respondents described their organizations as in “growth mode” due to the disruption caused by the pandemic, nearly three times what they claimed in July 2020.
The survey also found that 1 in 4 companies surveyed said treasury and finance teams should work more closely to improve working capital management, and 5.8% said there is no collaboration between companies today. two teams.
The study authors say companies should work to improve forecasting, visibility and teamwork to better inform decisions made by their executive teams and improve cash flow and accounts receivable. An interesting note: 40% of AR teams wait until invoices are actually due to demand payment from their customers, including nearly 1 in 5 (19%) who wait 10 or more days after the due date.
Download the report here.