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A Special Report from The Accounts Payable Network
Key Accounts Payable
Benchmarks
Throughput, Cost and Automation
Sponsored By:
$95 USD
Key Accounts Payable Benchmarks
Throughput, Cost and Automation
A Special Report from
The Accounts Payable Network
By
David Hay
Senior Consultant with The Accounts Payable Network
Former Director, Shared Services, Hewlett-Packard Company
With
Rob Rogers
Vice President & Managing Editor, Financial Operations Networks LLC
Sponsored By:
2100 RiverEdge Parkway, Suite 380 • Atlanta, GA 30328
770-984-1184 • FAX: 770-984-1174
www.TheAccountsPayableNetwork.com
© 2009 Financial Operations Networks
Published by Financial Operations Networks, LLC, Atlanta, Georgia.
All rights reserved. No part of this publication may be used or reproduced in any manner or
stored in any form whatsoever without written permission of the publisher. For information,
contact Financial Operations Networks, 2100 RiverEdge Parkway, Suite 380, Atlanta, GA 30328,
770-984-1184, www.finopsnet.com.
ISBN 0-9822166-7-X
Table of Contents
The Accounts Payable Network Advisory Board............................... 4
Executive Summary.................................................................... 5
Summary Study Observations...................................................... 6
Study Results............................................................................. 8
Cost per Invoice..................................................................... 8
Implemented Tools and Technology..........................................11
Planned Tools and Technologies...............................................17
Outsourcing..........................................................................18
Summary.................................................................................21
Appendix..................................................................................22
Survey Participants................................................................22
Invoices...............................................................................24
ERP/Accounting Systems........................................................29
FTEs in Accounts Payable........................................................30
Scope of Work......................................................................31
About The Accounts Payable Network...........................................32
About David Hay.......................................................................33
About Kofax..............................................................................34
© 2009 Financial Operations Networks LLC
3
The Accounts Payable Network
Advisory Board
Vivian Baker
Accounts Payable Director, Financial Shared Services, The Coca-Cola Company
Judy Bicking, APM
Former Global Director, Accounts Payable European Project, Johnson & Johnson
AP Best Practice Consultant and owner of Island Decor & More / Ship to Shore Home Decor
Debbie Vander Bogart
Senior Director, Finance General Manager, Shared Service Center, Levi Strauss & Company
Tom Brewer
Vice President, Shared Services, Michaels Stores Inc.
Carlos Flecha, CPA, APM
Director-Finance Shared Services, Wal-Mart Stores, Inc.
David W. Hay
Consultant, Former Director, Shared Services, Hewlett-Packard Company
Loette King, APM
Senior Director, Procurement & Payment Services, Emory University
Julie Lord
Senior Director, Global Process Owner Procure-to-Pay & Travel Expense Pfizer, Inc.
Thomas F. Nichols
President, Process Management Improvement, Inc. and former director of financial operations
for AT&T’s corporate accounts payable and payroll management
Leslie Noffsinger
Manager, Pottery Barn Customer Care Center, Williams-Sonoma
Linda Sawyer Sisko, APM
Marketing programs manager, Cisco Systems, Inc.
Susan Tinkler-Muller
Senior Director, Accounting Services, MTV Networks
© 2009 Financial Operations Networks LLC
4
Executive Summary
Accounts payable is in transition. What was once a clerical and paper-based bill-pay
function is evolving to a lower-cost, more efficient automated process that also will
provide greater visibility and control, permit value-added analysis of spend, and improve
forecasting and cash-flow management. The Accounts Payable Network’s (TAPN) October 2009 Key AP Benchmarks study of 411 companies provides a snapshot of companies’ progress in the transition and demonstrates the correlation between automation and
performance in terms of processing throughput and cost.
A comparison of TAPN’s October 2009 study with that of 2007 confirms that the more
automated a company’s AP department is, the lower the cost to process invoices and the
greater the number of invoices processed per FTE. The comparison also shows that the
large, highly automated companies, per-invoice processing costs have declined during the
last two years while the costs for smaller, less automated companies, have increased.
The TAPN study also shows that the best performing companies achieve their results by
implementing a number of technologies such as workflow, front-end scanning, e-invoicing, p-card usage, and travel and entertainment expense (T&E) reporting and processing automation. They also continue to operate the older technologies such as EDI, while
increasing the usage of newer ones such as Web Portals and EIPP.
This report focuses on invoice processing cost and productivity, but there is a critical
benefit obtained from a well implemented AP automation program: it meets key goals of
CFOs according to CFO Magazine (October 2009), namely it provides the information
needed to forecast and manage working capital while maintaining productivity.
© 2009 Financial Operations Networks LLC
5
Summary Study Observations
Comparison between one organization and another is challenging due to the presence of
many variables. These include size, industry, organizational structure, implemented tools
and technology, scope of work, and outsourcing. Many of the metrics here are broken
down by size, organizational structure and industry in order to provide information for
closer comparison. The benchmarks here demarcate the playing field and indicate what is
possible with a given set of circumstances and tools.
Study findings include:
• Use of Purchase Orders (POs): the median percent of invoices that are for
purchases made with a PO is 50 percent. There is some variation according to
company size but the real distinctions in the use of POs show up by industry
rather than size. POs are most frequently employed in retail trade and public
administration (government), followed by wholesale trade, manufacturing and
utilities. The industries using POs the least are finance & insurance, and professional, scientific and technical services.
• Only the largest organizations receive a significant percentage of invoices in
an electronic format that requires no manual data entry.
• By industry, only retail trade and wholesale trade receive e-invoices in
significant percentages.
• Invoices processed per month per full-time equivalent employee (FTE) range
from a couple hundred at the first quartile to 2,300 at the third quartile. There
is a correlation between company size and throughput per FTE—the larger the
company, the greater throughput per FTE.
• Total cost to process an invoice for all participants ranged from $2.73 in the
first (top performing) quartile, $5.00 at the median, and nearly $10.00 in the
third quartile.
• Organizations with 5,000 employees or more have lower cost per invoice due
to factors including economies of scale and transaction automation tools and
technologies.
© 2009 Financial Operations Networks LLC
6
• The first quartile cost-per-invoice figure for companies with 10,000 or more
employees is $1.77—outstanding performance; this is nearly a dollar less per
invoice than the first quartile figure of all cost companies.
• Regarding the tools and technology to automate payables, it is not a surprise
that larger organizations are more likely to have implemented EDI, automated
workflow, p-cards, and other transaction automation technology.
• Shared services centers are more likely to have implemented automation
technologies than merely centralized AP operations.
© 2009 Financial Operations Networks LLC
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Study Results
Cost Per Invoice
Following are data on cost per invoice. The cost to process an invoice payment in this
study is calculated by taking the direct monthly cost of accounts payable operation
(excluding corporate overhead) and dividing that by number of invoices processed per
month. Calculating cost per invoice is simplified in this approach, particularly since most
companies by far do not take an activity-based approach to cost calculation. Comparison
can be complicated by the variation in the scope of work of accounts payable departments
(see scope data in Appendix).
The major driver of cost per invoice is labor intensity, which is driven by manual tasks
associated with paper invoices such as mail handling, data entry, manual approval routing, and error correction. It is also driven by the manual work caused by rejects from
automated processes.
According to TAPN’s Key AP Benchmarks study, the median percent of invoices received as paper is 80 percent, while the average is 70 percent. There are still a lot of paper
invoices being processed, with significant negative—and expensive—consequences.
Cost to Process an Invoice
Company Size
(Employees)
All Companies
1st Quartile
Median
3rd Quartile
$2.73
$5.00
$10.00
< 500
$4.13
$8.88
$16.67
500 - 999
$2.25
$5.00
$9.80
1,000 - 4,999
$3.00
$4.57
$8.08
5,000 - 9,999
$3.08
$4.39
$8.62
10,000 +
$1.77
$3.06
$9.27
© 2009 Financial Operations Networks LLC
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Cost to Process an Invoice, by Industry
There is a large divergence in cost between the various industries; some of the variance
can be attributed to company culture and processes.
The types of spend also affect cost. Retailers and manufacturers achieve the lowest costs
primarily because the bulk of their spend is for direct materials (raw materials, or goods
for resale) which leads to a higher use of POs and automation. At the other end of the
spectrum, finance companies’ spend is almost entirely for indirect goods and services.
Even within retailers, those that measure costs by spend type find that the processing
costs for indirect spend is much higher than with direct spend. One company found that
although its average cost was below $2.00 per invoice, its processing cost range was
between $1.25 and $25.00 per invoice. Indirect spend is often non-PO based and the invoices are more complicated. Such invoices require manual approval and are often from
one-time or seasonal vendors, factors which hamper automation. As a result the processing costs can be driven more by the company’s industry than by its size.
Cost to Process an Invoice, by Industry
Industry
1st Quartile
Median
3rd Quartile
Accommodation and Food
Services (Hospitality)
Educational Services
$1.89
$3.57
$6.67
$2.73
$5.00
$11.11
Finance and Insurance
$3.52
$6.60
$13.44
Health Care and Social Assistance
$2.99
$3.85
$6.94
Information/Media/Publishing
$3.84
$10.05
$25.00
Manufacturing
$2.00
$4.26
$8.48
Professional, Scientific or
Technical Services
Public Administration (Government)
$6.00
$4.17
$12.22
$6.67
$17.50
$8.33
Retail Trade
$1.17
$3.56
$8.00
Utilities
Wholesale Trade
All Others
$3.00
$2.06
$2.29
$6.05
$2.73
$4.00
$10.52
$4.00
$8.33
© 2009 Financial Operations Networks LLC
9
Cost to process an invoice—Shared Services vs. Centralized Accounts Payable
Eighty-five percent of participants in the study have a centralized AP operation or a
shared services center. Looking at these divisions as separate groups, the following table
compares cost data strictly by organizational structure. Shared services groups have the
edge, explained in part by the greater focus which can come from being set apart as an
operating unit rather than as a traditional support unit.
Cost per Invoice
Shared
Services Centers
Centralized
Accounts Payable
1st Quartile
$2.05
$3.18
Median
$3.98
$5.91
3rd Quartile
$8.01
$12.43
A major benefit shared by shared service centers and centralized AP units is economies of
scale. However, failure to use opportunity of scale to introduce process change and technology will forfeit the real benefits of consolidation. Centralizing without process change
will have only a limited, onetime benefit. In most cases the type of process change recommended includes having all invoices sent directly to the accounts payable center and
not to the individual requesters or buyers, along with increased use of PO’s and p-cards.
The real benefit of a shared services center is its ability to automate the process and take
real costs out. Below is a discussion of the benefits technology can bring.
© 2009 Financial Operations Networks LLC
10
Implemented Tools and Technology
So why do some industries and companies achieve much better results than others? One
main reason is the implementation of the right mix of technologies. Lasting results are
only achieved by companies that completely implement an automation plan; those that
only partially automate may actually have higher costs than those that do nothing.
While invoices can be captured and entered through front-end scanning or entered automatically from an e-invoicing system, a key to an efficient automation strategy is the
workflow process. Scanning or e-invoicing are only preparatory steps and on their own
will do nothing to reduce costs. A workflow engine must be in place to automate approval
routing, discrepancy handling and matching.
The following chart shows the extent to which particular tools and technologies have
been implemented across all companies. Shown are the percentages of companies that
have implemented various technologies.
Note that often when a company has implemented a given technology (e.g. EIPP), in
many if not most cases, it processes only a percentage of invoices via that technology.
Organizations use or will use multiple technologies to process their accounts payable,
according to the variety of formats in which they receive invoices from vendors. Only
the largest buyers can effectively dictate the format to be used, and even they often find
it necessary to retain a paper process for small vendors with whom they do business, and
who may still be submitting hand-written invoices on a ruled piece of paper.
© 2009 Financial Operations Networks LLC
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Implemented Tools and Automation (Percentage of Companies)
30%
Traditional EDI (ANSI X12 or UN/EDIFACT
Standard format) electronic invoicing
40%
Front-end scanning/imaging
10%
EIPP or Electronic Invoice Delivery (not PDF)
38%
Automated workflow process
43%
T&E automation system
60%
P-card program
0
10
20
30
40
50
60
The following table breaks out tool and technology implementation by company size.
As can be seen, the larger an organization, the greater the likelihood of automation
technology implementation.
Tools and Automation Technologies Implemented
Company Size
(Employees)
Traditional EDI
(ANSI X12 or UN/EDIFACT
Standard format)
Front-end scanning/imaging
Automated workflow process
EIPP or Electronic Invoice
Delivery (not PDF)
T&E Automation system
P-card program
500 999
1 - 499
1,000 4,999
5,000 9,999
10,000 +
15%
22%
21%
19%
24%
20%
32%
45%
42%
33%
48%
48%
53%
62%
59%
6%
25%
37%
4%
31%
50%
8%
46%
74%
13%
56%
67%
22%
61%
72%
© 2009 Financial Operations Networks LLC
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Traditional EDI (ANSI X12 or UN/EDIFACT)
The two formats accepted globally include the most comprehensive list of documents
covering all facets of both domestic and international trade. EDI has been implemented
by 30 percent of companies in the study, essentially unchanged from two years ago.
Heavy manufacturing, retail and wholesale trades are the largest users of these formats
invoicing. This started with the implementation of the ANSI Standard EDI in the 1960s,
and EDI continues to dominate in these industries today. However with the advent of
the Web, many companies now receive e-invoicing through Web portals or EIPP service
providers. Within these industries the lowest processing costs are achieved with direct
purchases (i.e. those used in the manufacture of goods, or goods for resale) rather than
indirect purchases, (such as services, office products, etc). A key driver for this cost advantage is that more direct purchases are initiated by an e-PO or blanket PO. This allows
for easier automatic matching within the workflow or ERP system.
A drawback to traditional EDI is its cost to implement and its complexity. However, its
greatest benefit is that once set up and running, the system can handle very large numbers
of documents at a low cost per transaction. It is for these reasons that EDI remains quite
viable for the very large companies.
Front-end Scanning / Imaging
Paper will be with us for a considerable time. Front-end scanning (including OCR imaging) can offer a cost-effective method of converting paper to an electronic format for
entry into the workflow or ERP systems. Forty percent of companies in the study have
implemented front-end imaging, up from 30 percent two years ago. The use of this technology has no impact on the company’s supplier community, as they continue to send
paper invoices. Other benefits are similar to that of e-invoicing, such as approval routing. In addition it allows companies to scan in one country, while processing in another,
lower-cost environment.
© 2009 Financial Operations Networks LLC
13
Scanners come in all sizes and price ranges, which allows even the smallest AP groups
to benefit from this technology. A small AP department can scan an invoice and attach
the document to an e-mail for approval routing with no translation programs or ERPs
required.
Companies with greater resources may adopt OCR imaging. Whereas scanning creates
an image of the invoice but the data must still be manually keyed into the accounting
system, OCR scanning programs can interpret and capture most of the information on
the invoice for 65 to 70 percent of invoices. Although some editing may be required,
OCR reduces manual data entry and the mistakes it creates, thereby providing further
cost savings.
EIPP or Electronic Invoice Delivery (Not PDF)
Internet-based e-invoicing networks are provided through third-party application and
service providers. EIPP suppliers provide procure-to-pay process and workflow solutions
along with data transmission and conversion between trading partners, while EID
(electronic invoice delivery) service providers handle just the data transmission and conversion between parties and are system-agnostic. Ten percent of companies have implemented EIPP or EID, and the same percent plan to implement EIPP or EID over the next
two years.
Web Portals
Invoicing via Web portals are offered primarily by the largest companies. Web portals
are used to drive electronic invoicing down to the smaller suppliers who cannot justify
the costs associated with developing and maintaining traditional EDI or even EIPP/EID
applications. This is the method of choice for business-to-consumer and business-to-small
business, and is heavily used by banks and utilities to deliver online invoices.
In addition, large companies’ portals allow small suppliers to input their invoices directly.
Some EID and EIPP providers provide such portals as well, allowing small suppliers to
submit invoices electronically to large customers on the particular EID or EIPP network.
© 2009 Financial Operations Networks LLC
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Automated Workflow Process
An automated workflow process is the real heart of an invoice process automation system. E-invoicing on its own is only “fast mail” and front-end scanning is less beneficial
unless there is a system that will handle the routing approval, reminders, matching, etc.
The best-performing companies build in business rules to totally automate the system.
For example in a fully automated system, if an invoice is from a known vendor, the required information is complete and valid, and the value is below a set amount or within a
set tolerance, the workflow system sends the invoice straight to the ERP for payment.
The trend toward centrality of workflow automation is apparent in the current and
planned implementation data. Initially p-cards led the way in invoice reduction, replacing
a flood of low dollar invoices with a single monthly statement. Now that 60 percent of
companies have accomplished that step, and with several data capture methods available
(especially scanning/imaging), companies are moving ahead with automated workflow.
Nearly 40 percent of companies have implemented an automated workflow system, a
figure that is expected to continue to increase significantly—another 35 percent expect to
implement automated workflow in the next two years.
T&E Automation System
Automated T&E systems have been implemented by 43 percent of companies, up from
28 percent two years ago. Another 22 percent expect to implement automated T&E in the
next two years.
A well implemented T&E system greatly reduces the time and effort required by an AP
department to process T&E documents. In addition, these systems, coupled to a Webbased booking system, allow businesses to reduce their travel spend by imposing rules on
the users. Rules can enforce company policies regarding approved hotels and airlines and
set limits on restaurant charges. They can also enforce policy for corporate card use. One
Fortune 100 company has even done away with management approvals and instead relies
on a well-written policy manual, with penalties laid out, and a strong audit process.
© 2009 Financial Operations Networks LLC
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These systems can be further automated as many companies that use these systems pay
the credit card provider directly and only return to the employee the amount due for incidentals such as mileage and cash transactions.
P-card Programs
It is estimated that in the U.S. one-third of all invoices are below $100.00 and in most
large companies as many as 80% of all invoices are below $1,000.00. It is not surprising that a number of these companies have mandated p-card use for all invoices under a
set value, often for all purchases that fall below a maximum of $1,500.00 to $2,500.00.
Sixty percent of companies in the study have implemented p-cards, making it the most
widely implemented transaction processing automation tool. Fourteen percent expect to
implement a card program in the next two years.
There are many options available for users—options that range from physical cards to
ghost cards and one-time use numbers. In addition, cards are issued for specific transaction types such as T&E cards, transport cards, purchasing cards or one card that combines
all types into a single card. Furthermore, card programs have been introduced for use not
only as purchase tools but as payment tools for inventory purchases that rely on a PO and
invoice process.
© 2009 Financial Operations Networks LLC
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Planned Tools & Technologies
Implementation Expectation
Looking ahead, the trend continues towards greater implementation of the key technologies, particularly workflow, combined with all forms of invoice-capture technology.
These expectation figures are very similar to those of the 2007 study, although this year
“None” appears for the first time. “None” appears to be a result of the economy rather
than a lack of will, as many companies have had to postpone, or cancel, automation plans.
Planned Technology Implementations During the Next
Two Years (Percentage of Companies)
16%
Traditional EDI
32%
Imaging
EID/EIPP
9%
22%
Web invoice portal
35%
Workflow automation
11%
IWR (web invoice lookup system)
14%
P-card
22%
T&E Automation System
None
13%
0
© 2009 Financial Operations Networks LLC
5
10
17
15
20
25
30
35
Outsourcing
Outsourcing has gained momentum in the last few years. Companies started by outsourcing non-core activities, such as company cafeterias and cleaning, to manufacturing processes, and now increasingly, accounting functions. The day of the virtual company may
be almost upon us. This is nearly the case in a set of companies in high-tech manufacturing and the automobile industry, where some “manufacturers” are now at best assemblers.
In the AP arena, outsourcing ranges from individual processes such as freight payments
or discrete technologies such as scanning or EDI, to complete operations, the latter often
to off-shore companies across the globe.
Total outsourcing is often done only to cut costs and the idea appears to be that the outsourcer can handle “your mess for less.”
The following graphs show the percent of participants that outsource specific tasks or
functions. Large organizations are much more likely to outsource some functions than
small- and mid-size organizations, as seen in the table below.
AP Duties Outsourced
80
78%
70
60
50
40
30
20
12%
10
7%
6%
3%
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0
© 2009 Financial Operations Networks LLC
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Outsourced AP Functions
18%
Accounts payable audit & recovery
14%
Freight bill audit or audit & payment
9%
Telecommunication bill audit or audit & payment
Utility bill audit or audit & payment
7%
T & E expense report processing
6%
3%
Unclaimed property reporting
2%
1099 reporting
3%
Other
65%
We do not outsource any functions
0
10
20
30
40
50
60
70
80
Outsourcing Tasks by Company Size
Company Size
(Employees)
1 - 499
500 - 999
1,000 4,999
5,000 9,999
10,000 +
Data Entry
2%
4%
4%
6%
14%
Scanning/imaging
8%
7%
11%
15%
20%
Check printing
4%
2%
6%
13%
11%
Other
Do not
outsource anything
3%
0%
5%
2%
4%
86%
89%
79%
65%
66%
© 2009 Financial Operations Networks LLC
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Functions Outsourced by Company Size
Functions
Outsourced
Accounts payable
audit & recovery
Freight bill audit or
audit & payment
Telecommunication bill
audit/audit & payment
Utility bill audit or audit
& payment
T&E expense
report processing
Unclaimed
property reporting
1-499
500 - 999
1,000 4,999
5,000 9,999
10,000 +
3%
9%
18%
25%
37%
9%
11%
11%
19%
24%
5%
6%
6%
12%
17%
2%
0%
6%
10%
21%
2%
6%
5%
8%
13%
1%
0%
2%
2%
9%
1099 reporting
2%
0%
3%
0%
4%
Other
Do not
outsource anything
0%
4%
3%
4%
4%
86%
72%
62%
52%
43%
© 2009 Financial Operations Networks LLC
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Summary
Automation remains the key to more cost-effective and efficient invoice processing. The
technologies used will continue to be a blend of the old and the new. OCR and the Web
will be increasingly used to automate invoice capture with more sophisticated workflow
technologies handling the processing.
Look for companies to start charging for paper; this already takes place in the retail industry and in Europe.
Automated processing also brings with it many benefits that are not necessarily costrelated but are of great importance to C-level management. These benefits include
discount recovery, cash flow management and forecasting, and improved auditing
and compliance.
Although paper invoices still dominate, many of paper’s drawbacks are being alleviated
by the use of front-end scanning and OCR, and it is expected that overall the use of einvoicing will exceed the use of paper invoices within the next few years.
The companies that achieve the lowest cost per invoice are those that centralize with a
shared services center and make the most of technology and tools such as p-card and
automated T&E. In addition, strategic outsourcing of specific processes to specialists can
reap gains, such as AP audit and recovery and freight bill audit and payment.
No matter what path a company chooses, there are a few ground rules for success. Get
buy-in from all parties involved, from upper management to your internal and external
customers. Set goals and measure progress against them. Communicate, communicate,
communicate, then celebrate success. You will see costs come down and morale and productivity go way up.
© 2009 Financial Operations Networks LLC
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Appendix
Survey Participants
Participants by Organization Size
(Number of Employees)
1-249
5% 3%
16%
250-499
10%
9%
13%
13%
500-999
1,000-4,999
5,000-9,999
30%
10,000-19,999
20,000-34,999
35,000+
Size of participant organization by annual revenue
(gross assets for financial institutions)
1st Quartile
$64,200,000
Median
$441,820,500
3rd Quartile
$2,000,000,000
© 2009 Financial Operations Networks LLC
22
Participant organizations by industry (NAICS)
NAICS
Percent of Respondents
Accommodation and Food Services (Hospitality)
3.4%
Administrative and Support
2.2%
Agriculture, Forestry, Fishing and Hunting
0.7%
Arts, Entertainment, Recreation
1.2%
Construction
1.7%
Educational Services
5.8%
Finance and Insurance
15.1%
Health Care and Social Assistance
10.5%
Information/Media/Publishing
Management of Companies and Enterprises
Manufacturing
Mining, Quarrying, Oil & Gas Extraction
Professional, Scientific and Technical Services
Public Administration (Government)
Real Estate and Rental/Leasing
Retail Trade
Transportation and Warehousing
Utilities
Wholesale Trade
Other
(Does not total to 100 percent due to rounding)
© 2009 Financial Operations Networks LLC
23
5.1%
0.2%
24.8%
1.9%
6.1%
4.1%
1.2%
3.6%
1.9%
4.6%
3.2%
2.4%
Invoices
Total number of invoices processed per year
# of Employees
< 500
1st Quartile
Median
3rd Quartile
4,000
12,000
22,000
500 - 999
21,000
30,000
47,250
1,000 - 4,999
40,000
70,000
137,500
5,000 - 9,999
70,000
140,000
270,000
156,000
301,000
800,000
10,000 +
Invoices processed per FTE
The following table presents the key AP metric of invoices processed per FTE per month.
Number of invoices processed per FTE per month
# Employees
< 500
500 - 999
1,000 - 4,999
5,000 - 9,999
10,000 +
1st Quartile
Median
220
500
625
613
663
© 2009 Financial Operations Networks LLC
400
667
1,056
1,001
1,235
24
3rd Quartile
813
1,328
1,406
1,667
2,299
The following table presents the key AP metric of invoices processed per FTE per
month by industry. (Industries representing less than 3 percent of participants are
aggregated into “Other.”)
Number of invoices processed per FTE per month by Industry
Industry
1st Quartile
Median
3rd Quartile
Accommodation and
Food Services (Hospitality)
662
1,136
3,813
Educational Services
313
775
1,528
Finance and Insurance
297
458
817
Health Care and Social Assistance
736
1,250
1,708
Information/Media/Publishing
155
417
1,285
Manufacturing
Professional, Scientific
or Technical Services
500
900
1,667
217
387
521
Public Administration (Government)
625
808
1,250
Retail Trade
744
1,589
3,750
Utilities
699
1,110
1,542
Wholesale Trade
All Others
833
1,667
2,320
448
972
1,549
© 2009 Financial Operations Networks LLC
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Invoices with Purchase Orders (POs)
The following table shows what percentages of invoices are PO-invoices, i.e. go against a
purchase order. Variations in the use of POs emerge by industry.
Percent of Invoices Against Purchase Orders by Industry
Industry
1st Quartile
Accommodation and
Food Services (Hospitality)
Median
3rd Quartile
6%
40%
69%
14%
43%
80%
1%
10%
51%
Health Care and Social Assistance
30%
50%
80%
Information/Media/Publishing
22%
45%
60%
Manufacturing
Professional, Scientific
or Technical Services
50%
70%
85%
1%
10%
65%
Public Administration (Government)
50%
80%
85%
Retail Trade
35%
80%
89%
Utilities
28%
60%
74%
Wholesale Trade
All Others
42%
75%
80%
10%
38%
75%
Educational Services
Finance and Insurance
© 2009 Financial Operations Networks LLC
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Paper Invoices
The following table indicates the percent of invoices that are received on paper via mail.
Variations are seen according to both organization size and industry, though the variation
by size only shows up among the largest organizations. There is still a lot of paper in
accounts payable.
Percent of Invoices Received on Paper - by Industry
Industry
1st Quartile
Median
3rd Quartile
Accommodation and
Food Services (Hospitality)
52%
75%
95%
Educational Services
79%
95%
98%
Finance and Insurance
50%
80%
95%
Health Care and Social Assistance
70%
90%
95%
Information/Media/Publishing
40%
70%
90%
Manufacturing
Professional, Scientific
or Technical Services
45%
75%
90%
66%
80%
95%
Public Administration (Government)
85%
95%
99%
Retail Trade
20%
30%
83%
Utilities
55%
80%
94%
Wholesale Trade
All Others
22%
50%
90%
75%
85%
96%
Percent of Invoices Received on Paper - by Company Size
Company Size
(Employees)
1 - 499
500 - 999
1,000 - 4,999
5,000 - 9,999
10,000 +
1st Quartile
Median
69%
80%
60%
50%
23%
© 2009 Financial Operations Networks LLC
85%
90%
85%
75%
50%
27
3rd Quartile
95%
98%
95%
86%
95%
PDF Invoices
The following table indicates the percent of invoices that are received as PDFs via email.
While many vendors consider this electronic invoicing, it is not true electronic invoicing,
since the invoices must still be either manually entered or scanned via OCR.
Percent of Invoices Received as PDFs
Industry
1st Quartile
Median
3rd Quartile
Accommodation and
Food Services (Hospitality)
1%
2%
10%
Educational Services
1%
5%
5%
Finance and Insurance
1%
7%
20%
Health Care and Social Assistance
1%
3%
5%
Information/Media/Publishing
4%
13%
35%
Manufacturing
Professional, Scientific
or Technical Services
5%
12%
26%
4%
9%
25%
Public Administration (Government)
0%
2%
10%
Retail Trade
3%
5%
10%
Utilities
1%
5%
22%
Wholesale Trade
All Others
1%
1%
5%
2%
8%
17%
© 2009 Financial Operations Networks LLC
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ERP/Accounting Systems
Participants were also asked to identify what ERP or accounting system they use. There
are a lot of systems in use. Here are the most widely used systems by percent of
respondents that have implemented them. One quarter—25.7 percent—of companies
currently have more than one system.
ERP or Accounting System
Percent of Companies
SAP
24.3%
Oracle
15.6%
Peoplesoft (Oracle)
14.6%
In-house / Legacy System
11.2%
JD Edwards (Oracle)
10.7%
Lawson
9.2%
Great Plains
5.8%
Microsoft
4.9%
QuickBooks
3.6%
SunGard
3.6%
Sage Group
3.4%
Geac
2.7%
BaaN
1.7%
Deltek Cost Point / Vision /GCS
1.7%
Infinium 2000
1.7%
McKesson
1.2%
Other
© 2009 Financial Operations Networks LLC
24.5%
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FTEs in Accounts Payable
FTEs in AP Correlated to Organization Size
These figures represent the number of full-time equivalent employees currently staffing
accounts payable operations according to the size of organization.
Number of FTEs in AP
Company Size
(Employees)
1 - 499
500 - 999
1,000 - 4,999
5,000 - 9,999
10,000 - 19,999
20,000 +
1st Quartile
© 2009 Financial Operations Networks LLC
Median
1
2
4
8
11
20
30
3rd Quartile
2
4
7
12
16
35
3
5
10
17
33
66
Scope of Work
The scope of work of an accounts Payable department varies from organization to
organization. The following graph lists particular functions and responsibilities and the
percent of companies where those functions fall within the scope of the accounts
payable department.
Responsibilities of Accounts Payable
79%
1099 reporting
1042S reporting
Bank reconciliation
Check printing/production
EFT payments (ACH, wire, credit/BIP payment)
Foreign currency payments
G/L reconciliation
Invoice processing
Manual (rush) checks
P-card administration
Petty cash
Sales & use tax reporting
T & E expense reimbursement processing
T & E policies & management
T & E card administration
Unclaimed property reporting & escheatment
VAT reclaim
Vendor master file
Other
15%
18%
79%
73%
42%
47%
99%
85%
41%
36%
25%
77%
49%
32%
33%
13%
67%
7%
0
© 2009 Financial Operations Networks LLC
20
31
40
60
80
100
About The Accounts Payable Network
The Accounts Payable Network (TAPN) the complete resource for accounts payable,
helping more than 36,000 accounting and finance executives at organizations worldwide
meet their commitments to accounts payable business process performance.
TAPN provides—in one easy-to-access, cost-effective, online location—insights, analysis, guidance, advice and best practices for AP strategies, technologies, controls, compliance, people and processes. Members have unrestricted access to critical information
guaranteed to help them make smart accounts payable business decisions.
Focus areas include all AP functions, AP metrics and benchmarking; tax and regulatory
compliance; proven solutions to real-world problems; AP automation; case studies; member Q&A networking forums and more than 250 downloadable, customizable AP policies,
flowcharts, templates and internal-control checklists.
TAPN’s highly popular AP tools help compare technologies and AP solution providers,
find new ways to streamline operations and enhance controls, and take advantage of extensive educational opportunities. Additional networking opportunities allow members
to share problems and solutions with peers “in the trenches” through the public and private forums and discussion groups.
The Accounts Payable Network is completely independent and is not owned by or
affiliated with any industry supplier. For further information, please contact The
Accounts Payable Network, 2100 RiverEdge Parkway, Suite 380, Atlanta, GA 30328,
770-984-1184, www.TheAccountsPayableNetwork.com
© 2009 Financial Operations Networks LLC
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About David Hay
David has recently retired from a 40-year career spanning International Banking, Finance
and Computer Services and Outsourcing. Most recently, David served as the Director of
Shared Services Business Services Outsourcing, for Hewlett-Packard. He was formerly
marketing manager for e-payments and financial services for Global eXchange Services
(GXS), where he was responsible for the strategic direction and development of GXS’s
online invoicing and payment solutions for B2B e-commerce on a worldwide basis and
has served on GE Capital’s initiative to create a GE Center of Excellence for e-billing.
David has worked with GE Capital, GE Medical Systems and GE Industrial Systems. As
a member of key focus groups and task forces, he helped the GE businesses with their
EDI and e-commerce initiatives. In his 24 years of GE experience, he has held several
key management positions in financial services, e-commerce and sales & marketing. A
former international banker, David has over 35 years of experience in the financial and
e-commerce industries.
David now provides consulting services in payables improvement and procure-to-pay
process; he works closely with The Accounts Payable Network as a part of TAPN’s advisory board; he is a regular speaker at accounts payable and payment conferences; and he
is CFO of Atlantis Divers in Richmond, Virginia. (Dave is an accomplished diver, and his
CEO son a top-rated dive instructor.)
© 2009 Financial Operations Networks LLC
33
About Kofax
Kofax plc (LSE: KFX) is the leading provider of document driven business process
automation solutions. For more than 20 years, Kofax has provided award-winning solutions that streamline the flow of information throughout an organization by managing the
capture, transformation and exchange of business critical information arising in paper, fax
and electronic formats in a more accurate, timely and cost-effective manner.
Kofax offers unmatched scalability from central to highly-distributed environments,
from individual desktops to enterprise deployments and from basic scanning to powerful
document classification and data extraction. Our market leading technology supports a
wide variety of input devices and line-of-business applications, providing a strong
enterprise-wide platform on which to standardize all of an organization’s document
driven processes.
Kofax solutions provide a rapid return on investment to thousands of customers in financial services, government, business process outsourcing, health care, supply chain and
other markets. Kofax delivers these solutions through its own worldwide sales and service organizations, and a global network of more than 1,000 authorized partners in more
than 60 countries throughout the Americas, EMEA and Asia-Pacific.
Kofax also provides technologies to scanner manufacturers on an OEM basis, and our
EMEA hardware distribution network brings scanning and storage products to resellers in
more than 40 countries.
© 2009 Financial Operations Networks LLC
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