Manual AP Processes: A Growth Obstacle for Finance Leaders
According to a recent study, an overwhelming majority (82%) of finance leaders across the US, UK, and Europe recognize that excessive manual finance processes are hindering their organizations’ growth plans for the year ahead. Notably, two-thirds (66%) point to accounts payable (AP) as the most time-consuming manual process in finance.
The study, conducted by Tipalti, uncovers the challenges faced by finance leaders due to inefficient AP processes. Notably, 79% of respondents feel like they’re falling behind the rest of the business due to AP inefficiencies and continued reliance on manual processes. The increasing volume of invoices to process, coupled with limited resources and time, has exacerbated finance inefficiencies. In fact, over three-quarters (79%) of finance leaders report a 24% increase in time spent on manual data entry in the past year, with an average of 41 minutes now required to process a single supplier invoice.
While recovering from ongoing macroeconomic challenges is a priority for many leaders and businesses globally, 78% acknowledge that growth in the current economy is only possible if they can maximize cost-saving opportunities across the entire organization. However, inefficiencies within finance departments are impacting the rest of the business, and leaders can no longer afford to ignore or tolerate these AP inefficiencies. Nearly half (44%) attribute this to financial uncertainty and the need to offset higher inflation-related costs, while 42% cite the increasing complexity of their business, and 39% point to criticism or pressure to transform from other parts of the business.
“Finance leaders know that inefficiencies with manual processes in the business simply won’t cut it when riding out the wave of uncertainty,” said Rob Israch, President at Tipalti. “They do not provide the business with the visibility or control needed to fully steer the direction of the business and thereby, contribute to growth. Despite this, the prevailing lack of insight into automation’s full potential, means finance leaders have only just scratched the surface of what’s possible.”
In this challenging economic climate, businesses need to identify areas for efficiency gains and consider automating the entire end-to-end process of accounts payable. Piecemeal solutions may offer temporary relief, but true transformation lies in embracing automation across the full AP cycle. This will contribute to their economic recovery and uncover growth opportunities.
On average, over half (51%) of AP time is spent on manual tasks, yet, the ambition to reduce this time is small amongst many finance leaders—just 45% aim to reduce this time—although they recognize the benefits of end-to-end automation. Of those that are hesitant, more than one-third (37%) state the required skills and training as the leading barrier to investing in finance automation, followed by finding appropriate tools/vendors (35%) and proper suitability for their business model/complexity concerns (34%).
Beyond impeding organizational growth, the continued reluctance to automate is preventing the finance team from contributing strategic value to their organizations in other ways. With the freed-up time by finance automation, finance teams aim to look for growth or efficiency opportunities (39%), be more strategic and proactive with compliance and (38%) and make strategic recommendations to the business based on financial insights (36%).
Furthermore, AP inefficiencies are impacting talent and contributing to difficulties attracting staff, increased staff disgruntlement, and churn. More than half (59%) say they have considered leaving their job because of the stress associated with using manual AP processes. Businesses cannot ignore these issues, especially as they contend with an already shrinking pool of talent. On average, 84% believe AP inefficiencies and a continued reliance on manual processes are contributing to challenges in attracting finance or AP staff. 83% link this to increased churn of finance staff, 83% reference personal stress and demotivation, and 77% point towards disgruntlement or low morale amongst employees.
“To combat what is currently an uninspired and unmotivated finance team, we must take steps to inspire the next generation of talent,” highlights Or Zilberman, Chief People Officer at Tipalti. “This includes creating a more dynamic environment that embraces modernization through technology to make the career path more attractive and enjoyable, whilst encouraging employee retention. The finance office has huge potential to evolve and shape strategic decisions – but only if they’re not bogged down in administrative, low-value tasks.”
For more insights, access the full report at [website address].
Tipalti conducted 600 interviews with Finance and AP leaders in the US, UK, and Germany in conjunction with Insight Avenue. The criteria required interviewees to be from high-growth businesses (expecting revenue growth of 20% or more in the next 12 months) with 50 to 1,000 employees. Interviews were conducted during Q1 2023.
