Accounts Payable Trends
In this fast-paced digital age, organizations are increasingly streamlining their processes with technology. This reality is evident in the rapid growth of accounts payable (AP) automation within the past decade. For instance, between 2018 and 2019 alone, there was a 27 percent increase in organizations that reported to have adopted AP automation. A Levvel Research 2019 Payables Insight Report has revealed this fact and others. Read on to review all the highlights from the full 2019 Accounts Payable Trends Report.
AP automation offers many benefits. It can reduce paper invoice volume, lower costs, and increase employee productivity. As a result, it has become clear that AP automation is a powerful tool that drives competitive advantage.
Where does your organization stand?
Let’s examine the latest major market shifts behind this increase in AP automation adoption. Additionally, we will explore how you can optimize your organization’s automation processing.
Accounts Payable Trends: Notable Market Shifts
It’s becoming easier to find a tailored automation software solution that suits your organization’s unique needs. This reality reflects the ongoing accounts payable trend of the automation market becoming broader and more diverse. In return, this shift has given SMEs and mid-market organizations the resources to compete with larger enterprises. As more organizations implement this specialized software, they’re beginning to see the long-term competitive advantage and scalability of company-wide implementation. As a result, this has made embracing back-office automation the new best practice for organizations looking to grow and reach the top of the industry.
What motivates or prohibits movement towards technology?
With benefits such as these, why aren’t all organizations on board with the technology movement already? For many, this hesitation comes down to a lack of up-to-date knowledge on options that can meet any organization’s needs and budget. Additionally, some organizations may be accustomed to their current strategies and feel tentative to take the plunge and invest their time and money in AP automation. However, failing to ditch manual processing could inhibit organizational growth.
Popular AP Automation Tools
Recent AP automation trends show many organizations are using a variety of different tools to optimize their performance. Some industry favorites include an AP management tool built into their existing ERP, a homegrown tool developed by internal technology resources (either organically or as a plug-in to existing ERP or accounting systems,) and a third-party, cloud-based plug-in tool.
ERP-Based AP Automation Tools
This solution appeals to organizations who want to automate but are comfortable with their ERP environment. They may also want to save time and money. However, ERP-based solutions tend to deliver a poor user experience. They are challenging to integrate with other tools and update. Talk about a resource drain! These problems only get bigger as your organization grows. Additionally, Levvel Research found that survey respondents report believing that their ERP-based solution didn’t have enough features.
Another frequently used solution is using a customized homegrown tool that works with legacy technology systems. Similar to ERP-based AP automation tools, the maintenance of this tool can be challenging. They often are financial and time constraints for IT teams, especially as companies increase in scale. Both ERP-based and homegrown solutions are especially popular among SMEs. However, larger businesses and organizations experiencing growth often seek alternatives.
Optical Character Recognition
Another rising method of data capture processing is automated using optical character recognition (OCR). Advanced data entry technology might combine OCR with artificial intelligence (AI) or machine learning (ML) capabilities that can intelligently detect invoice patterns of an organization, which provides an impressive level of accuracy.
OCR technology is being used efficiently in several invoice receipt methods, including mailroom services, online portals, and email extraction. However, it’s important to remember that because it often requires some manual maintenance, OCR usually isn’t a standalone data entry solution. Rather, it should be valued as a useful tool that can significantly reduce the time needed to process many invoices.
Based on its recently conducted research and industry knowledge, Levvel Research has determined that cloud-based solutions are often more robust and generally have more features than ERP-Based solutions. Cloud-based plug-in software is increasingly dynamic, flexible, affordable, and easy to adapt for organizations of all sizes and types. In the AP, cloud-based solutions are known to improve control, invoice lifecycle times, productivity, and costs. They also have unique capabilities like supplier self-service portals, access to real-time data, and mobile applications.
Levvel Research’s survey respondents using a cloud-based solution felt more content with their current features. They were also more likely to believe their software is “modern and cutting edge” than their counterparts using other solutions.
Accounts Payable Trends: The Numbers
- 52% of automated organizations tend to approve invoices in less than four days vs. 41% of manual organizations said the same.
- 86% of SME organizations capture invoice details manually.
- 87% of Enterprise organizations use invoice workflow automation.
- 43% of automated organizations stated they experience few issues and were satisfied with their Procure-to-Pay process, vs. only 9% of manual organizations reported this.
- Only 27% of Mid-Market and 14% of SMEs use an automated solution.
- 49% of organizations require 2 or 3 approvers for each invoice.
- Reduction in paper and quicker approval times were the top 2 benefits of automation, with 47% of respondents reporting a decrease in paper and 47% of respondents indicating faster approval times.
- Cloud-based AP automation adoption has significantly increased from 22% to 49% between 2018 and 2019.
- 44% of organizations cite a lack of budget as the top barrier to AP solution adoption.
- 56% of organizations report having front-end imaging (scanning)/optical character recognition (OCR)
Many organizations have found that their ideal solution is a combination of multiple tools.
For example, an organization already equipped with an ERP may not want to overhaul their system to implement a new type of AP feature that isn’t supported. To work around this, they might choose to plug in a cloud-based tool that targets a specific function.
Don’t let manual AP processing hold you back. The future of your organization depends on it. Your ideal AP solution is out there, and it’s going to transform your business and give you the competitive edge you need.