As digital tools and automation replace manual processes and approvals, and accounts payable (AP) departments go remote, the time to process an invoice has significantly dropped.
Compared to 2020, non-purchase order (non-PO) invoice cycles reduced by seven per cent from 7.2 days to 6.6. Non-PO invoices typically cover miscellaneous expenses, like travel costs, society dues and other purchases that would be considered out of a company’s normal procurement process.
On the other end, there are PO invoices, which are the response to a purchase order between a buyer and a seller. When AP departments receive these types of invoices, they would typically have to match up the purchase order to the number, price and quantity of the PO invoice.
Since 2020, cycles for processing PO invoices reduced by four per cent from 6.55 days to 6.29.
This is significantly faster than the average invoice processing time, which according to Ardent’s ‘state of e-payables‘ is 10.3 days.
This data has been collected and subsequently published by the AP provider Medius, which uncovered how invoice processing times fell for both non-PO and PO invoices.
Most organisations improved their AP process performance, however, the gap between the average and best performers is surprising.
Best performers have achieved a PO-invoice processing time of one day, compared to the average customer, with a cycle of six days.
The report also shows strides made in touchless invoicing, the process by which invoices are captured and processed without user intervention. Touchless invoicing has increased over the past few years thanks to machine learning (ML) technology and improved reporting on touchless confidence levels.
However, the average rate is down two per cent in the last two years, while the rate is up by one per cent for best-in-class performers. This discrepancy could indicate a lag in performance caused by newcomers to AP automation.
“The pandemic forced companies to innovate, automate and streamline their back-office processes,” explains Medius CEO Jim Lucier. “The result for the AP team is a faster invoice cycle. A quicker process through automation means business leaders can make better decisions about their finances.
“But it’s not just about speed. Companies should ensure a faster invoice cycle doesn’t compromise on quality. With the right tools, teams can speed up and use the latest technology to detect and prevent fraud too.”