june 2011 2011ar automation study a survey of ar … · respondents said their company is planning...

June 2011

2011AR AUTOMATIONSTUDY A SURVEY OF

AR PROFESSIONALS

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Published July 2011. Copyright © 2011 by The Institute of Financial Operations

All rights reserved. Reproduction or transmission of this publication in any form without the express permission of the copyright holder is prohibited and is a violation of federal copyright law.

The information contained herein has been diligently obtained from sources believed to be reliable and has been prepared with care. The Institute of Financial Operations and the authors disclaim any and all warranties as to the accuracy and completeness of this information. The Institute of Financial Operations and the authors, their directors, employees, or assistants can accept no liability for any damages or loss occasioned to any person, company, or entity due to errors or omissions in the information contained herein or in the interpretation thereof. The opinions expressed herein were developed from a survey of users in the United States and the analyses may contain the opinions of the author and may change at any time without notice.

This publication is designed to provide authoritative information at the time of publication in regard to the subject matter covered. It is not intended to offer accounting, legal, or other professional advice. If accounting, legal, or other professional advice is required, or if expert assistance is needed, the services of a competent professional person should be sought.

This document or any part thereof may not be reproduced in any form without the express written permission of the publisher.

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The Institute of Financial Operations is the umbrella association comprising four membership affiliates for finance professionals: International Accounts Payable Professionals (IAPP), International Accounts Receivable Professionals (IARP), the National Association of Purchasing and Payables (NAPP), and The Association for Work Process Improvement (TAWPI). Based in Orlando, Fla., with offices in Boston, New York, and London, the Institute serves as a global voice, chief advocate, recognized authority, acknowledged leader, and principal educator for people in financial operations, with a particular focus on accounts payable, accounts receivable, automation, document management, and procure- to- pay. Combined, the affiliates have more than 6,000 members.

Under the Institute, the affiliates share one board of directors, one staff, and a single portfolio of member benefits available to all, including Financial Operations Matters magazine and a new website scheduled to launch in late 2011. Each affiliate maintains its own customized brand, events, career resources, volunteer opportunities, online tools and other leading- edge resources, and educational offerings including e- learning and certification.

The Institute of Financial Operations Project Team

Thomas M. Bohn, CAE, President and Chief Executive OfficerJo E. LaBorde, Chief Operating OfficerJoe Stern, Creative/Design LeaderLaureen Crowley, Editor in Chief

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Table of Contents

INTRODUCTION Page 6

EXECUTIVE SUMMARY Page 7

Survey Methodology Page 7

About the Respondents Page 8

SURVEY RESULTS

Invoice Volumes Page 9

Invoice Values Page 9

Biggest AR Challenges Page 10

Average Cost to Produce and Send Out Invoices Page 10

E-Invoicing Adoption Page 11

Benefits of E-Invoicing Page 12

Top Obstacles to AR Initiatives Page 13

Invoice Delivery Channels Page 14

Invoice Destinations Page 14

Electronic Signatures Page 15

E-Invoice Submission Page 15

Average Invoice Processing Costs Page 16

Average Invoice Cycle Times Page 16

Employee Allocation Page 16

Invoice Production Page 17

Outsourced Invoice Printing and Distribution Page 17

Outsourced E-Invoicing Page 18

CONCLUSION Page 19

APPENDIX

Survey Questions Page 20

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About Our Sponsor

Esker helps organizations eliminate paper and improve business processes by integrating on-premise and on-demand document automation with applications for higher efficiency in sales order processing, invoicing, accounts payable and purchasing to shorten order-to-cash and procure-to-pay cycles. Built on patented technology, Esker solutions address the challenges of manual document processing that limit an organization’s ability to increase speed and accuracy, raise productivity, reduce complexity, control costs and improve customer satisfaction. Over the past two decades Esker has become a worldwide leader in document process automation with offices in North America, Europe, Australia and Asia, and partners in more than 80 countries.

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IntroductionGiven the relative lack of market research data about accounts receivable automation, compared with other processes such as accounts payable, this study was undertaken as a fact-finding mission to uncover AR automation trends among companies in various industries. Our hope is that this study will help to fill the gap in available information about how companies handle their customer invoicing processes.

Companies in a variety of industry sectors have come to recognize the benefits of moving to electronic delivery of customer invoices. The advantages of electronic invoicing are clear: It’s faster, less expensive, more accurate and more reliable than manual invoicing, and it takes the inefficiency of paper out of the process. Electronic invoicing addresses a broad range of issues including operational cost control, limitations of built-in capabilities of enterprise systems for accounts receivable process automation, mailroom and mail house difficulties, allocation of skilled employees to non-value work, and lack of visibility to monitor customer invoice delivery and respond to customer inquiries about their invoices. Increasing the speed and accuracy of invoicing through document process automation also can enable companies to collect cash faster because invoices are delivered sooner.

Still, many companies face real and perceived obstacles that stand between them and the benefits of electronic invoicing. This leaves them with three choices: Do nothing and forgo major efficiency gains (while competitors are achieving them), try to move all customers to e-invoicing immediately (and almost certainly fail), or take on the high expense and complexity of custom-designing different processes for specific customers according to their various levels of sophistication.

The ideal solution is a means for companies to send all of their invoices electronically while enabling customers to receive those invoices in whatever way they prefer — whether by postal mail, e-mail or other electronic channel, or a combination. Such a solution would enable best practices in delivery of invoices directly from business applications, and would:

• Automatically send invoices in customer-preferred formats ranging from paper to electronic.• Reduce internal support for AR invoice delivery.• Archive invoices and associated documents or route them to a storage system.• Maintain and adapt as more customers adopt electronic invoicing.• Help customers go paperless and support green/sustainability initiatives.• Integrate seamlessly with enterprise systems.

The goal of this research was to check the pulse of the business world to discover how companies are sending their invoices to customers, the cost of sending those invoices, perceptions about the benefits of electronic invoice delivery, the key challenges of customer invoicing, and the main obstacles to implementing solutions for automation within accounts receivable. In addition, the survey was intended to gauge trends in accounts receivable automation toward initiatives to reduce customer invoicing costs, improve invoice delivery and visibility, and facilitate customer adoption of electronic invoicing.

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Executive SummaryIn cooperation with its sponsor, Esker, The Institute of Financial Operations conducted qualitative and quantitative research among accounts receivable professionals to gain insights into critical operations metrics, emerging automation trends, and technology and outsourcing plans.

Key findings of the survey include:

• A plurality of survey respondents (31 percent) indicated that their average cost to produce and send out invoices has not changed over the past two years.

• Among companies with less than $100 million in annual revenues, more than half (54.6 percent) indicated that their average cost to produce and send out invoices has increased either significantly (27.3 percent of respondents) or slightly (27.3 percent of respondents) over the past two years.

• The majority of the respondents indicated that they don’t use e-invoicing in AR.• A plurality of respondents (27.6 percent) believe that the biggest benefit of an e-invoicing solution is

fewer customer inquiries about misplaced invoices. • The lack of customer adoption of e-invoicing is the top obstacle to AR technology initiatives.• On average, survey respondents deliver 68.7 percent of their invoices via postal mail.• Some 86.7 percent of respondents don’t electronically sign for e-invoices, and none of the

respondents said their company is planning to deploy technology within the next 12 months.• Automatic submission and e-mail are the most common ways of submitting e-invoices.• Respondents stated that their average cost to process a paper invoice is $14.30, compared to $7.30

for a fax invoice and $0.75 for an electronic invoice.• Handling customer inquiries and calls is the most labor-intensive part of AR processing.• By and large, invoice production is still an internal mailroom function. • The overwhelming majority (80.8 percent) of survey respondents indicated that their company has no

plans to outsource its outbound invoice printing and distribution. • Only 7.7 percent of respondents outsource their e-invoicing.

Based on the findings of this study, it is clear that AR departments have a long way to go in migrating from inefficient paper-based processes. Paper still represents a high percentage of the invoices that AR professionals process each day; in fact, most AR departments still aren’t making use of e-invoicing, despite the eye-popping cost and labor savings detailed in this study.

Here’s the good news: Many AR departments have done a good job in holding the line on costs to produce and send out invoices. And they are doing it without having to outsource their paper or electronic operations. They ought to be asking themselves how much better their operations could run – and how much money they could save – if they leveraged AR technologies such as e-invoicing.

Survey Methodology

The online survey was presented to several thousand AR professionals during the spring of 2011. The survey was approximately 20 questions, including some that could be answered instantly with a single mouse click and others that were more complex (and likely required the respondent to retrieve some information). Respondents were given several weeks to take the survey.

A total of 67 respondents answered at least a portion of the online survey. Some 37.3 percent of the respondents completed every question in the survey (and the low adoption of e-invoicing explains why many respondents would have skipped questions related to use of the technology).

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About the Respondents

What is your company’s primary industry?

Healthcare13.6%

Manufacturing16.7%

Accounts Receivable Esker Study

Financial services/banking

18.2%

Telecommunications3.0% Insurance

3.0%

Government6.1%

Retail9.1%

Utility4.5%

Other22.7%

Electronics/IT1.5%

Education1.5%

Petrochemical0.0%

What is your company’s annual revenue?

Less than $100 million37.9%


$100 million to $500 million20.7%

$500 million to $1 billion10.3%

$1 billion to $5 billion13.8%

$5 billion to $10 billion6.9%

More than $10 billion10.3%

More than half of the respondents to the survey represent companies with annual revenues of less than $500 million. A plurality of survey respondents (37.9 percent) represent companies with annual revenues of less than $100 million, while 20.7 percent of survey respondents represent companies with annual revenues of $100 million to $500 million. The remaining 41.3 percent of survey respondents represent companies with annual revenues of more than $500 million.

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Invoice Volumes

How many invoices does your company send out each month?

Fewer than 1,00033.3%


1,000 to 5,000 26.7%

5,000 to 10,000 20.0%

More than 10,000 20.0%

A plurality of survey respondents (33.3 percent) indicated that their company sends out fewer than 1,000 invoices per month. Slightly more than one-quarter of the survey respondents (26.7 percent) stated that their company sends out between 1,000 and 5,000 invoices per month, while 20 percent indicated that their company sends out between 5,000 and 10,000 invoices per month and 20 percent stated that their company sends out more than 10,000 invoices per month. Fifty percent of the manufacturers that responded to the survey stated their company sends out 5,000 to 10,000 invoices per month, while 50 percent of the respondents from healthcare and financial services/banking organizations indicated that their company sends out fewer than 1,000 invoices per month.

Among respondents from companies with revenues of less than $100 million per year, 63.6 percent indicated that their company sends out fewer than 1,000 invoices per month. About one-quarter (27.3 percent) of respondents in this group stated their company sends out 1,000 to 5,000 invoices per month, while 9.1 percent said their company sends out 5,000 to 10,000 invoices per month.

Half (50 percent) of the survey respondents from companies with $5 billion to $10 billion in annual revenues indicated that their company sends out 1,000 to 5,000 invoices per month, while the other half (50 percent) stated that their company sends out 5,000 to 10,000 invoices per month.

Among respondents from companies with revenues of more than $10 billion per year, two-thirds (66.7 percent) indicated that their company sends out 1,000 to 5,000 invoices per month, while one-third (33.3 percent) stated that their company sends out more than 10,000 invoices per month.

Invoice Values

Respondents indicated that the average total value of the invoices their AR department processes each month is $39.1 million. The highest monthly total value of invoices processed by an individual respondent was $150 million; another respondent processes $130 million in invoices per month.

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Biggest AR Challenges

Respondents cited a variety of challenges in producing and sending out invoices:

• Limited automation• Last-minute corrections• Timely adjustments• Varying formats for invoice presentment• Manual additions• Time to stuff mail• Accuracy• Returned mail• Customers saying they did not receive their bill• Correction and approval of invoices• Correcting mailing address• Securing customer e-mail addresses• Situations where the shipping and billing addresses are different• Ensuring invoices get to the correct person• Having to mail invoices to smaller customers• Ensuring all invoices have been generated/printed

Average Cost to Produce and Send Out Invoices

How has your average cost to produce and send out invoiceschanged over the past two years?

Significantly higher13.8%


Unchanged31.0%

Slightly lower20.7%

Significantly lower6.9%

Slightly higher27.6%

A plurality of survey respondents (31 percent) indicated 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. Some 27.6 percent of respondents indicated that their average cost to produce and send out invoices has increased slightly over the past two years, while 13.8 percent stated their average cost to produce and send out invoices has increased significantly.

On the bright side, 20.7 percent of survey respondents indicated that their average cost to produce and send out invoices has decreased slightly over the past two years, while 6.9 percent of survey respondents stated their average cost to produce and send out invoices has decreased significantly.

Interestingly, three-quarters of respondents from healthcare companies indicated that their average cost to produce and send out invoices has increased either significantly (25 percent) or slightly (50 percent) over the past two years, while 50 percent of respondents from financial services/banking companies stated that their average cost to produce and send out invoices has increased significantly over the past two years. Forty percent of manufacturers that responded to the survey indicated their average cost to produce and send out invoices has not changed over the past two years.

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Among companies with less than $100 million in annual revenues, more than half (54.6 percent) indicated that their average cost to produce and send out invoices has increased either significantly (27.3 percent of respondents) or slightly (27.3 percent of respondents) over the past two years. More than a third (36.4 percent) of respondents in this group stated that their cost to produce and send out invoices is unchanged.

All of the respondents from companies with $5 billion to $10 billion in annual revenues stated that their average cost to produce and send out invoices has increased slightly over the past two years.

Faring much better, all of the survey respondents from companies with more than $10 billion in annual revenues indicated that their average cost to produce and send out invoices has decreased either slightly (66.7 percent) or significantly (33.3 percent) over the past two years.

E-Invoicing Adoption

Has your organization implemented an e-invoicing solution?

Yes33.3%


No56.7%

Plan to within six months10.0%

Plan to within 12 months0.0%

Despite all the hype, the majority (56.7 percent) of the respondents indicated that they don’t use e-invoicing in AR. One-third (33.3 percent) of respondents stated that they use e-invoicing, while 10 percent of respondents indicated that they plan to deploy the technology within the next six months.

Two-thirds of manufacturers that responded to the survey stated that they don’t use e-invoicing in AR, compared to the one-third that use the technology. Fifty percent of healthcare companies that responded to the survey stated they don’t use e-invoicing in AR, while 25 percent of respondents in this group indicated that they use e-invoicing and 25 percent said they plan to within six months.

Bucking the trend, three-quarters (75 percent) of financial services/banking companies that responded to the survey indicated that they use e-invoicing in AR, while 25 percent said they don’t.

Among responding companies with less than $100 million in annual revenues, 54.5 percent indicated that they haven’t implemented an e-invoicing solution, while 36.4 percent stated that they use the technology, and 9.1 percent indicated that they plan to implement e-invoicing within six months.

Fifty percent of responding companies with $5 billion to $10 billion in annual revenues indicated that they haven’t implemented an e-invoicing solution, while 50 percent stated they use the technology.

One-third (33.3 percent) of responding companies with more than $10 billion in annual revenues indicated they have implemented an e-invoicing solution with an additional 33.3 percent stating that they plan to implement the technology within six months. One-third don’t use the technology.

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Benefits of E-Invoicing

What do you believe is the biggest benefit of an e-invoicing solution?

Greater visibility into invoices24.1%


Improved compliance0.0%

Improved cash management20.7%

Ability to meet customer demandfor e-invoicing

10.3%

Reduced DSO(days sales outstanding)

17.2%

Fewer customer inquiriesabout misplaced invoices

27.6%

A plurality of respondents (27.6 percent) believe that the biggest benefit of an e-invoicing solution is fewer customer inquiries about misplaced invoices. About one-quarter (24.1 percent) of survey respondents stated that greater visibility into invoices is the biggest benefit of e-invoicing. Other top benefits of e-invoicing identified by survey respondents included: improved cash management (20.7 percent), reduced days sales outstanding (17.2 percent), and ability to meet customer demand for e-invoicing. None of the respondents identified improved compliance as a top e-invoicing benefit.

Half of the financial services/banking companies that responded to the survey identified greater visibility into invoices as the biggest benefit of e-invoicing, with the other half of respondents in this group citing reduced days sales outstanding. Similarly, 50 percent of the healthcare companies that responded to the survey identified greater visibility into invoices as the biggest benefit of e-invoicing, while the remaining respondents in this group cited improved cash management as the biggest benefit. A plurality of manufacturers (33.3 percent) identified reduced days sales outstanding and fewer customer inquiries about misplaced invoices as the biggest benefits of e-invoicing.

Companies with less than $100 million in annual revenues cited reduced days sales outstanding (30 percent) and fewer customer inquiries about misplaced invoices (30 percent) as the biggest benefits of e-invoicing. Half of the companies with $5 billion to $10 billion in annual revenues cited greater visibility into invoices as the biggest benefit of e-invoicing, with the remaining respondents in this group citing fewer customer inquiries about misplaced invoices. Two-thirds (66.7 percent) of companies with more than $10 billion in annual revenues cited fewer customer inquiries about misplaced invoices as the biggest benefit of e-invoicing, followed by reduced days sales outstanding.

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Top Obstacles to AR Initiatives

What is your top obstacle to AR technology initiatives?

Lack of internal supportfor technology changes

7.1%


Compliance/regulatoryconcerns

3.6%

Difficulty integrating an AR automation solutionwith current business applications

25.0%

Lack of customer adoptionof e-invoicing

32.1%

Lack of internal supportfor process changes

14.3%

Lack of senior-level supportfor technology initiatives

3.6%

Insufficient resources to ensure the delivery of

invoices through an automation tool10.7%

Too many formats for invoices

3.6%

The lack of customer adoption of e-invoicing is the top obstacle to AR technology initiatives.

Nearly one-third (32.1 percent) of respondents indicated that the lack of customer adoption of e-invoicing was their top obstacle. One-quarter (25 percent) of respondents cited difficulty integrating AR solutions with current business applications as their top obstacle to AR technology initiatives. Other obstacles respondents identified included: lack of internal support for process changes (cited by 14.3 percent of respondents), insufficient resources to ensure the delivery of invoices through an automation tool (10.7 percent), and lack of internal support for technology changes (7.1 percent).

Half of the manufacturers that responded to the survey identified difficulty integrating an AR solution with current business applications as their top obstacle to AR technology initiatives. Two-thirds (66.7 percent) of financial services/banking companies that responded to the survey cited the lack of customer adoption for e-invoicing as their top obstacle to AR technology initiatives.

Healthcare companies that responded to the survey were split on the top obstacle to AR technology initiatives, with an equal percentage (25 percent) citing lack of internal support for technology changes, lack of internal support for process changes, lack of customer adoption for e-invoicing, and lack of senior-level support for technology initiatives. Among respondents from companies with less than $100 million in annual revenues, a plurality (40 percent) identified lack of customer adoption for e-invoicing as the their top obstacle to AR technology initiatives. Fifty percent of respondents from companies with $5 billion to $10 billion in annual revenues identified lack of customer adoption of e-invoicing as their top obstacle to AR technology initiatives, with the remainder of the respondents in this group citing lack of internal support for technology changes. Respondents from companies with more than $10 billion in annual revenues were evenly split on the top obstacles to AR technology initiatives, with an equal percentage (33.3 percent) citing insufficient resources to ensure the delivery of invoices through an automation tool, lack of customer adoption for e-invoicing, and compliance regulatory concerns. This is the only group where compliance/regulatory concerns was identified as a top obstacle.

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Invoice Delivery Channels

The AR space has a long way to go in moving toward electronic invoice delivery.

On average, survey respondents deliver 68.7 percent of their invoices via postal mail (although 18 percent of respondents stated that all of their invoices are delivered via postal mail). About one-quarter (22.6 percent) of invoices are delivered via e-mail. Beyond e-mail, 15.6 percent of invoices are delivered via electronic data interchange (EDI), 13.2 percent are delivered via customer web portal, 9.3 percent are delivered via fax, and just 0.3 percent are delivered via supplier network.

Healthcare providers that responded to the survey deliver an eye-popping 83.75 percent of their invoices via postal mail; in fact, half (50 percent) of the survey respondents in this group stated that they deliver all of their invoices via postal mail. The financial services/banking companies that responded to the survey deliver three-quarters (75 percent) of their invoices via postal mail, while manufacturers that responded to the survey deliver 48.2 percent of their invoices via postal mail.

Companies with more than $10 billion in annual revenues have made the most progress in electronic invoices, delivering about one-third (38.75 percent) of their invoices via postal mail. Conversely, companies with $5 billion to $10 billion in annual revenues deliver a whopping 82.5 percent of their invoices via postal mail. Respondents from companies with less than $100 million in annual revenues deliver about two-thirds (66.8 percent) of their invoices via postal mail.

Invoice Destinations

Some 62 percent of respondents indicated that their company only delivers invoices in the United States. However, the remaining respondents send invoices to a wide variety of countries, including:

• Australia• Belgium• Canada• China• Czechoslovakia• France• India• Israel• Italy• Mexico• Netherlands• Spain• United Kingdom

Additionally, one survey respondent commented that his or her company delivers invoices to more than 140 different countries (without specifying them). Another respondent stated that his or her company delivers invoices to more than 110 different countries (again, without specifying them). Yet another respondent indicated that his or her company delivers invoices to “most of the Asia-Pacific companies.”

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Electronic Signatures

Do you sign electronically for e-invoices?

Yes13.3%


Plan to within 6 monthsPlan to within 12 months

0.0%

No86.7%

While there’s been a lot of talk of late about electronic signatures, an eye-popping 86.7 percent of survey respondents indicated that they don’t electronically sign for e-invoices, and none of the survey respondents stated that their company is planning to deploy technology within the next 12 months.

Half (50 percent) of the healthcare companies that responded to the survey currently sign electronically for e-invoices. However, none of the manufacturers or financial services/banking companies that responded to the survey stated their company electronically signs for e-invoices. Among companies with annual revenues of less than $100 million, 81.8 percent indicated that their company doesn’t electronically sign for e-invoices. Two-thirds (66.7 percent) of companies with more than $10 billion in annual revenues stated that they electronically sign for e-invoices. None of the companies with annual revenues of $5 billion to $10 billion electronically sign for e-invoices.

E-Invoice Submission

How do you submit your e-invoices (check all that apply)?


0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Print driver E-mail Automatic submission

18.8%

56.3%

50.0%

Automatic submission and e-mail are the most common ways of submitting e-invoices.

More than half (56.3 percent) of the survey respondents that deliver e-invoices indicated that they use automatic submission. Fifty percent of respondents in this group stated that they use e-mail to

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submit e-invoices, while 18.8 percent of these respondents said they use a print driver to submit e-invoices.Here is the breakdown of e-invoice submission method by selected vertical industry:

ManufacturingAutomatic submission: used by 80 percent of respondents in this groupE-mail: used by 80 percent of respondents in this groupPrint driver: used by 20 percent of respondents in this group

Financial services/bankingAutomatic submission: used by 25 percent of respondents in this groupE-mail: used by 75 percent of respondents in this group

HealthcareAutomatic submission: used by 50 percent of respondents in this groupPrint driver: used by 50 percent of respondents in this group

Among companies that use e-invoicing and have less than $100 million in annual revenues, 66.7 percent use e-mail to deliver e-invoices, while 33.3 percent stated that they use automatic submission to submit invoices, and 16.7 percent use a print driver to submit invoices. All of the e-invoicing users with more than $5 billion in annual revenues indicated that they only use automatic submission.

Average Invoice Processing Costs

For companies still unsure about the cost savings from e-invoicing, the results of this question should be an eye-opener. Respondents stated that their average cost to process a paper invoice is $14.30, compared to $7.30 for a fax invoice and $0.75 for an electronic invoice. This means that paper invoices are nearly twice as costly as fax invoices and almost 20 times more costly than e-invoices.

Average Invoice Cycle Times

Web form invoice submission is the fastest way to deliver an invoice. Respondents stated it takes an average of 1.3 days to deliver an invoice using web form invoice submission. Similarly, it takes survey respondents an average of 1.7 days to deliver an invoice via e-mail, and 1.9 days to deliver an invoice via fax. In addition, respondents indicated that it takes an average of 4.6 days to deliver an invoice via EDI, while it takes 5.1 days to deliver a non-purchase order (PO)-based paper invoice, and 9.9 days to deliver a PO-based paper invoice.

Employee Allocation

Handling customer inquiries and calls is the most labor-intensive part of AR processing.

Survey respondents indicated that they dedicate an average 3.7 full-time employees to managing customer inquiries and calls. Paper invoice production requires an average 3.03 full-time employees -- more than twice as many full-time employees as companies dedicate to e-invoice delivery (1.5 full-time employees). Additionally, sending faxes requires one dedicated full-time employee.

Respondents from companies with less than $100 million in annual revenues dedicate an average of 3.5 full-time employees to handling customer inquiries and calls, topping the labor requirements for paper invoice production (1.75 full-time employees), e-invoice delivery (one full-time employee) and sending faxes (no dedicated employees). Respondents from companies with $5 billion to $10 billion in annual revenues dedicate 12 full-time employees to managing customer inquiries and calls. That’s in addition to the six employees respondents in this group dedicate

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to paper invoice production, the one employee dedicated to e-invoice delivery, and the one employee dedicated to sending faxes.Invoice Production

By and large, invoice production is still an internal, mailroom function. Respondents indicated that an average 81.4 percent of their invoices are produced in an internal mailroom versus a mail house.

Seventy-five percent of manufacturers that responded to the survey indicated that all of their invoices are produced in an internal mailroom, while 66.7 percent of the financial services/banking companies stated that all of their invoices are produced in an internal mailroom. None of the healthcare companies that responded to the survey said they use a mail house for invoice production.

Respondents from companies with less than $100 million in annual revenues indicated that 85.8 percent of their invoices are produced in an internal mailroom, versus a mail house. None of the companies with more than $5 billion in annual revenues uses a mail house for invoice production.

Outsourced Invoice Printing and Distribution

The overwhelming majority (80.8 percent) of survey respondents indicated that their company has no plans to outsource its outbound invoice printing and distribution. Just 3.8 percent of respondents stated that their company plans to outsource their outbound invoice printing and distribution within the next six months, with an additional 3.8 percent of survey respondents indicating their company plans to outsource the function within the next 12 months. Some 11.5 percent of survey respondents indicated that their company already outsources its outbound invoice printing and distribution.

None of the manufacturers that responded to the survey said their company already outsources its outbound invoice printing and distribution, and none of the respondents in this group has plans to outsource the function. Fifty percent of the financial service/banking companies that responded to the survey indicated that their company already outsources its outbound statement printing and distribution, while the rest of the respondents in this group stated that their company has no plans to outsource the function. While 50 percent of the survey respondents from healthcare companies stated that their company has no plans to outsource its outbound statement printing and distribution, 25 percent stated that their company plans to outsource the function within the next six months and 25 percent indicated that their company plans to outsource the function within the next 12 months.

Among survey respondents from companies with less than $100 million in annual revenues, 81.8 percent indicated that their company has no plans to outsource its outbound invoice printing and distribution. Some 9.1 percent of survey respondents in this group stated that their company already outsources its outbound invoice printing and distribution, while 9.1 percent indicated that their company plans to outsource the function within the next six months. None of the respondents from companies with more than $5 billion in annual revenues indicated that their company already outsources its outbound statement printing and distribution, or has plans to outsource the function.

Is your company planning to outsource its outbound invoice printing and distribution?

Yes - within six months3.8%

No80.8%


Yes - within 12 months3.8%

Already outsourcing11.5%

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Outsourced E-Invoicing

Compared to outbound invoice printing and distribution, an even higher percentage of survey respondents indicated that their company has no plans to outsource its e-invoicing (80.8 percent versus 84.6 percent, respectively). Some 7.7 percent of survey respondents indicated that their company already outsources its e-invoicing. Additionally, 3.8 percent of respondents stated that their company plans to outsource its e-invoicing within the next six months and 3.8 percent of survey respondents indicated that their company plans to outsource its e-invoicing with 12 months.

Is your company planning to outsource its e-invoicing?Yes - within six months

3.8%

No84.6%


Yes - within 12 months3.8%

Already outsourcing7.7%

None of the manufacturers that responded to the survey indicated that their company already outsources its e-invoicing, and none of them stated that their company plans to outsource the function. Fifty percent of the financial services/banking companies that responded to the survey indicated that their company has no plans to outsource its e-invoicing, while the other respondents in this group stated that their company already outsources the function. As with outbound invoice printing and distribution, 50 percent of healthcare companies that responded to the survey indicated that they have no plans to outsource their e-invoicing. However, 25 percent of healthcare companies stated that their company plans to outsource its e-invoicing within the next six months, while 25 percent indicated that their company plans to outsource the function within the next 12 months.

Among survey respondents from companies with less than $100 million in annual revenues, 81.8 percent indicated that their company has no plans to outsource its e-invoicing, while 9.1 percent stated that their company already outsources e-invoicing and 9.1 percent indicated that their company plans to outsource the function within the next six months. None of the survey respondents from companies with more than $5 billion in annual revenues indicated that their company outsources its e-invoicing, and none of them stated that their company plans to outsource the function.

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Conclusion

Despite the advent of technology to make customer invoicing completely electronic for the sender, including automated delivery via postal mail, to integrate with business systems and to facilitate progressive customer adoption of e-invoicing, processes around delivery of invoices to customers remain paper-based at most companies. An examination of the customer invoice automation process raises several key questions:

• How are companies sending invoices (postal mail, fax or e-mail)?• What is it costing companies to send out invoices?• What are the key challenges of customer invoicing?• What are the main obstacles to implementing an AR automation solution?

Based on the findings of this study, the recommendation is for companies to keep a simple focus on delivery of customer invoices in assessing the value of technologies for AR automation. By focusing on delivery and investing in a solution that addresses their specific goals with regard to sending invoices, companies can overcome the obstacles to electronic invoicing and take advantage of the opportunity to significantly reduce costs and improve efficiency.

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Survey Questions

Name: ____________________________________________Company name: ____________________________________Mailing address 1:___________________________________Mailing address 2: ___________________________________E-mail address: _____________________________________Telephone number: __________________________________

What is your company’s primary industry?□ Healthcare□ Financial services/banking□ Insurance□ Government□ Retail□ Manufacturing□ Telecommunications□ Utility□ Petrochemical□ Electronics/IT□ Education□ Other: _______________

1. What is your company’s annual revenue?□ Less than $100 million per year□ $100 million to $500 million per year□ $500 million to $1 billion per year□ $1 billion to $5 billion per year□ $5 billion to $10 billion per year□ More than $10 billion

2. How many total invoices does your company send out each month?□ Fewer than 1,000 per month□ 1,000 to 5,000 per month□ 5,000 to 10,000 per month□ More than 10,000 per month

3. What is your AR department’s biggest challenge in producing and sending out invoices?

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4. How has your average cost to produce and send out invoices changed over the past two years?□ Significantly higher□ Slightly higher□ Unchanged□ Slightly lower□ Significantly lower

5. Has your organization implemented an e-invoicing solution?□ Yes□ No□ Plan to within six months□ Plan to within 12 months

6. What do you believe is the biggest benefit of an e-invoicing solution?□ Greater visibility into invoices□ Improved cash management□ Ability to meet customer demand for e-invoicing□ Reduced DSO (days sales outstanding)□ Fewer customer inquiries about misplaced invoices□ Improved compliance□ Other: ___________________________________

7. What is your top obstacle to AR technology initiatives?□ Lack of internal support for technology changes□ Lack of internal support for process changes□ Lack of senior-level support for technology initiatives□ Difficulty integrating an AR automation solution with current business applications□ Insufficient resources to ensure the delivery of invoices through an automation tool□ Too many formats for invoices□ Lack of customer adoption for e-invoicing□ Compliance/regulatory concerns□ Other: ____________________________________________________________

8. What is the percentage of your invoices currently delivered via each of the following channels?Postal mail: ____%Fax: ____%E-mail:____%Customer web portal:____%Supplier network:____%Electronic data interchange:____%

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9. Please list all of the countries to which you send invoices. If you do not send invoices to countries other than the one in which your company is based, please respond ‘N/A.’______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

10. Do you sign electronically for e-invoices?□ Yes□ No □ Plan to within 6 months□ Plan to within 12 months

11. How do you submit your e-invoices (check all that apply)? □ Print driver□ E-mail□ Automatic submission□ Other: ______________

12. What is your average cost to process a single invoice using the following methods? If you do not use a particular method, please respond ‘N/A.’Paper: $_________E-invoice: $________Fax: $________

13. What is your average cycle time (in calendar days) to deliver an invoice using the following methods? Paper: ______E-invoice: ______Fax: ______Overall: ______

14. What is the total number of invoices you deliver each month using each of the following methods?Paper: ______E-Invoice: ______Fax: ______E-mail: ______

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15. What is the total value of the invoices that your AR department processes each month?

16. How many full time employees are dedicated to:Paper invoice production: ______E-invoice delivery: ______Sending faxes: ______Customer inquiries/calls: ______

17. What percentage of your paper invoices are produced using the following methods?Internal mailroom: _____%Mail house: _____%

19. Is your company planning to outsource its outbound invoice printing and distribution?□ Yes – within six months□ Yes – within 12 months□ No□ Already outsourcing

20. Is your company planning to outsource its e-invoicing?□ Yes – within six months□ Yes – within 12 months□ No□ Already outsourcing

june 2011 2011ar automation study a survey of ar … · respondents said their company is planning...

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