A/P optimization is a serious challenge for CFO's and not least in times of economic uncertainty
London, UK (PRWEB) August 15, 2009
Proactis Group, the software specialist in Spend Control and eProcurement, today released results of a survey demonstrating that the CFO cost containment agenda is being compromised by underperforming Accounts Payable(A/P) departments. The problem stems from A/P processes and controls that have not advanced significantly over the past few years translating into higher transaction costs and difficulties in managing working capital.
As part of a CFO Research Series, Proactis set out to determine the impact of different levels of maturity in A/P operations in supporting the CFO's cost containment agenda, by surveying more than 100 European medium-sized businesses. It found that CFOs must first address A/P performance, in particular the rising cost of invoice processing and challenges associated with 'maverick' spend, to improve control and visibility of the cost pipeline and reduce financial risk.
Among the key findings:
- 71% stated reducing costs in A/P was critical to their strategy, including putting in place controls to optimize working capital. In particular they felt it essential to improve reporting capabilities versus transaction processing.
- 63% of respondents said their A/P team is primarily focused on approving invoices which had already been committed and fire fighting related discrepancies.
- More than two-thirds of respondents process over 75% of invoices manually
- 48% believed there are 'major' deficiencies in process that limit A/P in collaborating more effectively with internal and external stakeholders.
- 85% of respondents confirmed they had 'little visibility' or 'no visibility' of committed expenditure beyond A/P
- Over 83% of respondents said that the average cost to process an invoice is in excess of $55 or 'did not know the cost'. For the top performers this reduced to less than $5.
To download the survey insights visit http://www.proactis.com/ap-optimization.
"A/P optimization is a serious challenge for CFO's and not least in times of economic uncertainty" said Simon Dadswell, Director of Marketing, Proactis Group. "The results of this study show CFOs need to reconsider the role A/P plays in supporting company objectives."
"A/P must become less reactive and help CFOs to improve the control and visibility of indirect goods and services procurement company-wide, obtain clear visibility of commitments vs. budget, and enforce consistent spend authorization. Without this in place, the easiest route for employees is often outside of corporate control" continued Simon.
"The impact of such 'maverick' spend, whether innocent or malign, is that economies of scale are lost and off-contract buying invites corporate risk and even fraud. This has an enterprise-wide impact - reducing margin with all its implications; introducing inefficiencies and providing limited visibility of corporate liabilities."
To remedy this problem, Proactis has developed powerful Procure-to-Pay functionality in its flagship product, PROACTIS P2P, to manage all non-payroll spend and empower the CFO with the information necessary to effectively contain costs. The software is being used by in excess of 350 major corporate customers in over 70 countries spanning the Commercial, Public and Not-for-Profit Sectors.
PROACTIS P2P streamlines purchasing and invoice handling processes, imposing vital controls over spending, delivering instant cost-base visibility and automating typically inefficient paper intensive processes. Importantly, PROACTIS P2P integrates seamlessly with other operational systems, such as ERP or Financials, using a future-proof methodology to reduce cost and risk.
For more information visit http://www.proactis.com.
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