Aberdeen Report Reveals Key to Reducing Savings Leakage

Emphasizes invoice reconciliation and payment procedures

Emphasizes invoice reconciliation and payment procedures

Boston  July 8, 2004  Enhancing the order-to-pay process helps close the loop and improves the capture of sourcing, negotiation and contracting benefits, an Aberdeen Group report revealed.

The report, "The Invoice Reconciliation and Payment Benchmark Report," indicated that because of ongoing pressures to reduce costs, enterprises are focusing on the entire order-to-cash process to enforce compliance and maximize the usage of negotiated, preferred trading agreements.

"Regulatory pressure is only one of the things is driving process change," said Jeff Pikulik, Aberdeen's director of buy-side research and author of the report. "Continued competitive pressures for cost reductions and the need to enhance liquidity are the challenges most influencing additional emphasis on invoice reconciliation and payment (IR&P)."

Aberdeen's research found that more companies seem ready to rely on external, pre-configured solutions to automate processes, improve data integrity, manage the systems and perform other select roles. These electronic means significantly reduces costs, the firm said. The impact on invoice processing cost can be seen in companies where per-invoice cost reduction improvements were 50 to 60 percent, from $34 per to $12.50.

The report identified the following issues as the top strategic priorities for companies' IR&P programs: focus on managing cash flow; avoid penalties, duplicate payments and overpayments; integrate purchasing, payables and treasury decision making and process changes; and improve visibility and enforcement of policies and contractual terms.

The "Invoice Reconciliation and Payment Benchmark Report" distinguishes the current challenges of IR&P programs, as well as the specific strategies and operational actions undertaken by more than 700 enterprises. It also recommends specific improvement priorities that companies should pursue to increase the business value delivered from IR&P activities in the overall corporate order-to-pay process.