Getting the Paper Out of Payments: The Rise in e-Payment Adoption

E-payment

An Ardent Partners report details how best-in-class companies have realized substantial benefits by transitioning to electronic payments.

In an Ardent Partners report, “The State of B2B Payments 2015: Emerging Business Value,” published late last year, the emerging value that e-Payments provides to accounts payable is examined in depth. The report is based on a survey of more than 200 leaders from AP and finance and covers a wide range of issues that are both helping and hindering the adoption and deployment of this very significant and game-changing technology.

The acceptance of electronic payments by suppliers has changed dramatically. According to the report, slightly more than 60% of payments that are made today are made electronically. That doesn’t necessarily mean that the entire process is automated; only that the payments themselves are transmitted electronically rather than through paper checks. However, that is still a significant move. But best-in-class companies automate the entire P2P process, investing in the technology necessary to provide true value to the entire enterprise.

Automating the end-to-end process eliminates the errors and inefficiencies inherent in paper and manual processing. By deploying a solution that streamlines the process, human intervention is minimized and many invoices are handled by straight-through processing, where the invoice is checked for accuracy, matched to the PO, and sent directly into the ERP system. Companies that utilize this technology have reaped the rewards. According to the report, comparing best-in-class performers (who make up about 20% of all survey respondents) to the rest offers some striking comparisons.

The cost of processing a payment averages $0.89 for best-in-class vs. $10.66 for all others!

The percent of suppliers accepting e-Payments is 61.2% for best-in-class vs. 52.1% for others

The percent of invoices by Straight-through Processing is 37.7% for best-in-class vs. 23.1% for others

The first number in the group above (cost-per-payment) includes the total cost including staff and management time, facilities, etc. that all factor into costs. That comes to an almost $10 savings per payment. And automating the process means that each processor can handle a greater number of invoices in less time. That can also mean timely payments that may result in greater early-pay discounts and the invaluable good will with suppliers that all companies strive to achieve. In addition, this freeing-up of time for finance teams means that these experienced professionals can be involved in more strategic tasks; those intended to promote company growth.

Best-in-class companies earn that title by following through on their processes, using solutions that not only automate the P2P process, but offer additional advantages, including offering web-based supplier portals that give suppliers full visibility into their invoice status, eliminating the need for phone calls and other communications to verify payment. Compare the best-in-class percentage that offers this (46%) to those of the others surveyed (19%).

If your team doesn’t fall in the best-in-class category, you should definitely download the full report.

Jim Wright

About Jim Wright

Jim Wright is Corcentric’s National Account Manager. With over 15 years of consultative sales experience in the area of Accounts Payable Automation, Jim is responsible for building the client base for accounts payable solution, COR360™ and helping move clients’ current AP process to the next level. Jim previously worked for Achieve Systems, Ariba and Ceridian.

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