Where’s the automation?

By Mark Brousseau

Despite revenues in the billions of dollars and the document volumes inherent to that scale of operation, many—possibly even most—companies have not made the leap to automated data capture technology for invoice processing, a proven driver of efficiency and value in accounts payable (AP).

That’s the key takeaway of a survey of attendees of Fusion 2011, held May 8-12 at the Gaylord Palms Resort and Convention Center near Orlando, Florida. The survey polled AP professionals around the globe, working in numerous industries and for organizations ranging from less than $500 million in annual revenues to well in excess of $10 billion in revenues. It was conducted by The Institute of Financial Operations and sponsored by Brainware. Fusion 2011 brought together more than 1,800 financial operations professionals and 170 exhibiting companies.

With an increased focus on working capital management, many AP professionals are emphasizing a need for greater visibility into and reporting of invoice processing—a demonstrated strength of available data capture and extraction technologies such as optical character recognition (OCR) and intelligent document recognition (IDR). That’s what makes these survey findings so surprising.

More than half of the survey respondents (56.3 percent) indicated that their AP organization doesn’t use automated data capture technology. And, only 3.1 percent of respondents stated that their AP organization plans to implement automated data capture within the next six months, while 6.3 percent stated their AP organization plans to implement the technology within the next 12 months.

Why aren’t AP departments making greater use of automated data capture and extraction?

Tight capital budgets are undoubtedly a factor. But AP departments also may not see the need.

Despite their lack of data capture technologies, most of the respondents to the survey are doing a pretty good job of holding the line on invoice processing costs. A plurality of respondents (41.9 percent) indicated that their average invoice processing costs have not changed over the past 12 months, while 38.7 percent of respondents stated their invoice processing costs have dropped slightly. Only 12.9 percent of respondents indicated that their average invoice processing costs have increased either slightly (9.7 percent) or significantly (3.2 percent) over the past 12 months.

Similarly, a plurality of respondents (40 percent) indicated that their average cost to process an invoice is between $2 and $5 – in line with the costs published in surveys by industry research firms. Some 16.7 percent of respondents said their average invoice processing costs are less than $2.

But the survey results show that many AP departments could benefit from labor-saving technologies such as automated data capture. More than a quarter of respondents (26.7 percent) pegged their average invoice processing costs between $5 and $10. Worse, 13.4 percent of respondents stated their average invoice processing costs are between $10 and $20, while 3.3 percent of respondents indicated that their average invoice processing costs were between an eye-popping $20 and $25.

“Among other findings, more than a third of respondents claim it still takes them more than twelve days to process an invoice, inhibiting their ability to take early payment discounts, creating backlogs, and often necessitating increased headcount,” notes Charles Kaplan, vice president of sales and marketing at Brainware. Twenty-five percent of respondents stated it takes their organization more than 15 days to pay invoices. “Automated data capture solves those problems and many others.”

To this point, a plurality of respondents (32.3 percent) believe that “better visibility and reporting” is the biggest benefit of the technology, followed by “faster turnaround” (29 percent), “lower costs” (12.9 percent), “better working capital management” (12.9 percent), and “fewer errors” (9.7 percent). Only 3.2 percent of survey respondents stated that they see “no benefit” to automated data capture.

The bottom line is that despite all the hype about automating invoice processing with data capture technology, vendors have a long way to go in convincing AP departments to deploy them.

What do you think?