Study shows accounts receivable automation is at the tipping point
Study shows accounts receivable automation is at the tipping point9th May 2013
With most invoices still delivered by postal mail, paper still reigns as the preferred billing method for business-to-business transactions, according to the 2013 AR Automation Study conducted by The Institute of Financial Operations and sponsored by Esker, but electronic invoicing is closing in fast.
AR departments have made some strides in migrating from inefficient paper-based processes since The Institute's 2011 AR study. Encouragingly, a majority (54 per cent) of respondents indicated that their company currently uses an e-invoicing solution, up from 33 per cent in 2011, the most recent year a similar study was conducted.
"We've definitely seen a turning of the tide," says Jo E. LaBorde, executive director of The Institute. "AR professionals have long recognised the operational benefits of electronic invoicing; with this year's results, we are seeing a significant increase in demand from customers expressing their preference for electronic presentment."
A plurality of respondents (39.7 per cent) noted that their average cost to produce and send out invoices has not changed over the past two years - no doubt attributable to higher levels of automation and rising cost-consciousness. Not surprisingly, the average cost to process paper invoices far exceeds the average cost to process invoices using electronic methods. Almost 40 per cent of companies reported costs of more than $2 to process a paper invoice, while nearly half (44.4 per cent) indicated that it costs their companies less than $2 to process a single email invoice.
Beyond reducing overall invoicing costs, the 2013 survey showed that migrating to electronic invoicing will address many of the AR challenges identified by the respondents and help to relieve the most labour-intensive part of AR: handling customer inquiries and calls, particularly about misplaced invoices.
Although the vast majority of companies have no plans to outsource either outbound invoice printing and distribution (73 per cent) or e-invoicing (81 per cent), experience has shown that accelerating the migration to e-invoicing will help companies reduce operational costs, speed invoice delivery (accelerating cash flow), and reallocate staff from handling customer inquiries to value-added functions - all without having to outsource.
"These survey results definitely reflect what we're seeing in the marketplace," says Steve Smith, U.S. chief operating officer for Esker. "With automation acceptance approaching 90 per cent, I can't help but think that electronic invoicing will surpass paper by 2014." The Institute of Financial Operations serves the entire financial operations ecosystem, with a focus on AP and AR and the related fields of information management and data capture. It serves as a global advocate, authority, and educator for people in financial operations. Esker is a leader in cloud-based document process automation solutions.
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