The Danger of Clinging to Paper-Based Document Processing

It has become widely recognized that manual paper-based invoice processing has inherent problems that disadvantage companies in critical ways, undermining productivity and impeding the flow of information. Ignoring the problem is proving less and less an option in the current economic and competitive climate.

“Resistance is futile,” says PayStream Advisors, asserting that the percentage of companies claiming that their old processes work just fine is “dwindling to the point of irrelevance.”

Likewise, SciQuest reports that “the advantages of accounts payable automation are so clear and affordable that they overwhelm all of the common arguments for delaying development.”

A tipping point was reached in the past year, a PayStream Advisors study found, as reflected in electronic invoicing being ranked as the top automation goal for 2013 both globally and within the U.S. market. Automating accounts payable is now seen by many as a “no-brainer,” the report said.

Calling manual invoice processing “the enemy of efficiency,” PayStream Advisors says that the competitive business environment is forcing businesses “to focus on reducing processing costs and increase efficiencies associated with invoices and employee expenses.”

As more and more companies automate and achieve higher efficiency, says PayStream Advisors, it becomes harder to justify hanging on to outdated processes.

These findings are supported by Aberdeen Research, whose benchmark study describes how companies are moving to automate manual paper-based invoices processes because of inefficiencies that “continue to hamper accounts payable operations.” Aberdeen’s report describes how best-in-class organizations, by investing in document imaging and workflow, are able to achieve levels of performance “far beyond their peers.”

Forrester Research likewise reports that for those companies that stubbornly cling to the status quo of manual document processing, the result will be “increasing costs to manage paper processes, inability to offer Web-based self-servicing, and difficulty providing comparative levels of service with others that have digitized records.”

The Trouble with Paper-Based Processing

The problems associated with manual paper-based processing are many. “There are keying errors to start, but also the burden of manual routing, which frequently leads to hostaged, or even lost paperwork and a high number of discrepancies and exceptions,” says PayStream Advisors. Routing of invoices in paper form is time consuming and leads to other problems downstream, including a lack of visibility into outstanding invoices and the inability to capture supplier discounts, the study adds.

These problems have become exacerbated in today’s business climate. As SAP points out, the speed of business accelerates the impact of inefficient business processes like paper document processing, and the impact of these inefficiencies cascades across the business. For example, says SAP, purchase order processing delays can affect production and warehouse management, payment discounts can be lost, customer requests slowed, and opportunities missed.

The movement to automate invoicing operations, Aberdeen Research’s study found, is being driven by corporate directives to lower costs, lack of visibility into finances, difficulty finding and managing documents, inability to effectively manage cash, and inability to capture early payment discounts.

With the accounts payable process becoming increasingly strategic to the overall enterprise, says Aberdeen, “there will be no room for inefficiencies going forward.”

Other analysts also warn that companies that cling to paper-based processing risk falling behind competitors who have automated. Document management author Kevin Craine, for example, cautions that “in today’s competitive economic environment, companies that continue to conduct business on paper will struggle to control the inherent costs and inefficiencies and find themselves at a disadvantage.”

The view that invoice processing automation has become imperative is echoed by Comsquared, which asserts that document imaging, which was once considered a luxury, is now a necessity. Because of regulatory, financial, and global information sharing pressures, says Comsquared, companies “no longer have an option when it comes to document imaging.”

A report by Esker echoes this view, asserting that “businesses can no longer overlook the high costs and inefficiency of having staff spending so much time scrambling to enter invoices, get the necessary signatures for approval of payment, file invoices and retrieve them.”

The pressure to automate inefficient document processes is being felt across all sectors of organizations, including business and IT units. Argent reports that CIOs are feeling mounting pressure to increase their business’s efficiency, shave expenses, and enhance customer service. Because automation is the only effective way of doing this, says Argent, for CIOs “it’s automate or die.”

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