Doing more with less has become the mantra of the day. In the current recessionary economic environment, organizations are constantly being challenged to get more done with fewer resources. Accounts payable (AP) is no exception. AP departments now have to process more invoices and pay them faster, all with a smaller staff. The biggest stumbling block to accomplishing this has been our continued reliance on paper-based invoices and people-based processes.
PayStream Advisors conducted its "Imaging & Workflow Automation (IWA) Adoption Survey" in the last two quarters of 2008 to highlight trends that are shaping the rapidly evolving AP automation space. The survey revealed that manual data entry, matching errors and exceptions and routing invoices for approval emerged as the biggest challenges faced in day-to-day AP operations. In addition, implementing or increasing electronic invoicing emerged as a priority for 48% of companies surveyed. Furthermore, invoice imaging and automated workflow came next with 34% and 36% of companies, respectively, choosing to implement them within the next one year.
PayStream's research reveals that a significant shift is beginning to shake traditional AP operations, starting with the search for automation options that help them address the hassles inherent to people and paper-based activities. PayStream believes that IWA solutions that streamline the invoice receipt-to-pay cycle have matured and become mainstream technology. While the adoption of IWA solutions has mainly been limited to Fortune 1000 companies, this trend is seen to trickle down to small and medium-sized businesses.
PayStream analysts believe that the following factors will shape the evolution of the IWA:
- Convergence of electronic invoicing and front-end imaging. Over the last three years, there has been a convergence in this market with both types of providers partnering or developing functionality to offer comprehensive solutions covering both paper and electronic invoices and incorporating better options for invoice receipt, approval processing and discrepancy resolution.
- Front-end solutions will prevail. Front-end solutions preserve the benefits of back-end imaging and archival while providing additional advantages in the form of lower costs, higher processing efficiency and enhanced visibility and control.
- Organizations will seek straight-through processing.' As automation moves to the front-end of the AP process, organizations will seek to leverage straight-through processing so that AP staff and approvers can focus on more value-added tasks, rather than reviewing invoices.
- Advanced data capture will be a catalyst for adoption. Recent strides in advanced data capture technologies and the emergence of industrial strength solutions that can extract data accurately without having to rely on templates are the key drivers that are unlocking adoption of front-end imaging and data extraction solutions.
- Impact of AP automation on working capital management. Innovative solutions are emerging to meet organizations' strategic objectives by offering solutions that unlock significant value from the financial supply chain through advanced features such as vendor self-service, supplier on-boarding and dynamic settlement.
- Multiple solution models will coexist. There is not a single model for an IWA solution. Solutions are available in software form, as well as via SaaS models. Likewise, some vendors emphasize a modular mix-and-match approach, while others concentrate on providing a set solution. There is also tremendous variability in terms of solution focus. Industry consolidation notwithstanding, this diversity will continue.
SUSHMITHA KOKA [email@example.com] is the research director of PayStream Advisors, Inc., a financial automation research and consulting firm. For the full report, please go online to www.paystreamadvisors.com.