(by Geck Finn)

Enterprises using electronic invoices to optimize their order-to-pay processes stand to gain per-invoice cost savings of 50 to 60 per cent, to USD 12.50 per invoice, down from USD 34 for a paper invoice, according to Aberdeen Group. While corporate focus on invoice reconciliation and payment (IR&P) “is at an all-time high”, Aberdeen analyst Jeff Pikulik states, closing the procurement loop is frequently a hurdle to a successful IR&P program. In a new paper, “The Invoice Reconciliation and Payment Benchmark Report”, Pikulik argues that automated invoice reconciliation and payment processes are key to corporations seeking to reduce savings leakage.

Of the 700-plus US companies profiled in the report, over two-thirds received 80 per cent or more of their invoices in paper format, and used paper-based routing and approval processes. Fewer than 25 per cent of responding firms, by contrast, used automated processing options such as electronic data interchange (EDI), electronic receipts settlement (ERS) or electronic invoice presentment and payment (EIPP). Of the firms using EIPP, 20 per cent had shifted 20 to 50 per cent of their invoice/receipt payment volumes to the Internet, according to Pikulik, while two firms had shifted over 90 per cent of invoicing to the Internet.

Ninety-eight per cent of firms responding to Aberdeen’s survey had also increased the emphasis on back-end functions in the order-to-pay process over the past two years. Enterprise-level financial systems at 63 per cent of respondents handled IR&P processes satisfactorily, but less than half (42 per cent) measured IR&P activity, with days payable outstanding the most common metric tracked. This lack of metrics stalls the business case for IR&P programs, although procurement card (p-card) use is rising by 24 per cent annually, and ACH processing, by 38 per cent, while EIPP is used by five per cent of responding firms.