AP Automation: A Snapshot of Trends and Priorities in the UK
March 31, 2015
Study after study in 2012 in both the US and Europe, two dominant markets for AP automation, point to an increased take-up in AP automation technologies, accelerating a trend begun some 20 years ago. The convergence of an improved offering – both in terms of breadth and quality—means automation is slowly making inroads into one of the most paper-intensive business processes around. Interestingly, the take-up in these markets tends to focus on different technologies, with e-invoicing, for example, more prevalent in Europe and p-cards more dominant in the United States.
Top 3 trends in the UK
1. Document Imaging
The most widely implemented automation technology in the UK, according to the 2012 Accounts Payable News AP Survey is on the front-end, with 74% reporting usage of document imaging. This is an area of automation which has also shown the strongest growth, probably because it offers the most straightforward, if incremental, way to get started with AP automation which doesn’t necessitate a huge IT resource commitment. It may not be the long-term, permanent solution, but it is a stepping stone to removing manual, paper-based processes from AP. Growth in this technology will continue to be strong, at least in the short-term.
2. Workflow Technology
Solutions to automate the workflow process for invoices took the number two spot of most implemented technologies in the UK, with about a 40% take up reported by APN. With consistently improving technology, imaging and workflow providers can increasingly cater to any budget, from a-la-carte software-as-a-service options to customised solutions hosted internally. Besides streamlining the workflow and approval process, companies using workflow and imaging technologies are reaping the benefits of real-time visibility to invoices, strengthened internal controls and reduced paper and storage, along with demonstrable productivity gains.
The third most important automation technology in Europe and the UK is e-invoicing, and has been driven largely by public sector mandates, particularly in the Nordic countries. Accounts Payable News puts e-invoicing use within UK organisations at 38%
True e-invoicing-- which does not include emailing of pdf files-- is completely paperless and bypasses intermediary solutions of converting paper.
For this reason and because companies are first and foremost looking to achieve process efficiencies and cut costs, e-invoicing may leapfrog scanning technologies as it actually reduces invoice processing times whereas scanning adds a step in an already labour-intensive workflow.
According to the IFO / Basware 2012 e-invoicing study, the top barriers to e-invoicing have been 1) IT resources and budgets, 2) supplier-side reluctance or incompatibility and the 3rd is lack of integration with other AP systems. The good news they report is that supplier resistance is falling, from 46% to 26% currently.
The study predicts the tipping point year to be 2014/5 when a majority of companies will be using this technology.
Preponderance of paper
The preponderance of paper is still very much the norm in 2012, however, while technologies are implemented and evaluation of automation technologies and long-term planning get underway. Both Paystream and the IFO put the percentage of invoices that are still paper-based at around the 65% mark, with the IFO stating that nine out of 10 organisations still deal, at least in part, with paper invoices.
What’s holding AP automation back
While AP automation holds out the promise of reduced costs and improved productivity, the barriers to take-up are not surprising, given the economic climate over the past few years. Echoing the barriers to e-invoicing, the IFO automation study states that 33% of respondents say that lack of budget is the number 1 reason holding back AP automation, followed by number 2 lack of IT resources. The latter reason is fuelling interest in cloud-based, SaaS automation solutions since they free AP departments from both IT department constraints and hardware and software investment.
A significant, if somewhat surprising obstacle to uptake is an impression within Finance that current methods and processes in AP function well enough (23% of respondents) creating no impetus to drive adoption of more cost and labour-efficient solutions.
If the finance department heads are still in doubt of the return on investment promised by AP automation technologies, it will then fall to executive management to drive these projects through. Apart from large corporates not hamstrung by budgetary limitations, though, only small percentages of senior executives are aware of AP automation initiatives and options and those that are appear to be on the fence.
What does the future hold?
According to the IFO, the strongest area of AP automation growth will continue to be in document imaging and workflow technologies, followed by the continued take-up of e-invoicing. The 2012 APN survey also tips mobile apps and a rising interest in dynamic discounting to take hold saying, “During the course of 2012, it’s likely that the rise in new solutions such as dynamic discounting (which also enables supply chain financing), cloud solutions and mobile apps will start to provide the intuitive, flexible technology necessary to reach the tipping point to further automation.”
Interestingly, automating and streamlining internal, centralised AP departments is far more weighted in future plans than outsourcing AP functions according to several studies. The results of the 2013 APN study, due out imminently, will no doubt further clarify the latest UK AP technology trends.
Lessons Learned and Recommendations
Implementing new technology in a largely manual, heavily transaction-oriented environment requires stringent advance planning. Any automation project will necessarily place increased pressure on a typically already overstretched AP department so one of the most key pieces of advice put forward was to make sure the “decks are cleared” in AP well in advance of bringing in new or upgraded technology. AP departments are advised to conduct a full-scale audit to find and recover any historical duplicate payments and address any process weaknesses before the project starts. Specific quotes from the 2012 Global Trends study underscore these key recommendations:
“More time should have been spent planning and determining organisational and departmental requirements.”
“Purification of job functions and forecasting of metric requirements, future innovations and processing expectations should all be evaluated and considered before deployment.”
“Automated data capture has delivered efficiencies in throughput, accuracy and reporting…but there needs to be detailed reporting over the data prior to making any payments to pick up errors that could result in duplicate payments.”
FISCAL Technologies’ AP Forensics® software suite provides just the set of tools needed both to clear any historical payment and compliance issues and act as a check on new technology implementation, safeguarding the organisation during a period of vulnerability and potential risk.
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2012 Global E-invoicing Study, IFO / Basware
2012 Global Trends in Automated Data Capture, IFO/Perceptive Software
2012 AP Automation Study, IFO, et al
2012 eInvoicing Adoption Benchmarking Report, Paystream/ADP
The Rising Tide of US Electronic Payments, Radix Consulting/Dovetail
Data Capture for Accounts Payable, Paystream/Readsoft
The Value of Purchasing Cards, Paystream/USbank
APN Accounts Payable Survey 2012