Which accounts receivable process would you choose -- $11.50 or 71 cents per invoice?

Written by Thomas Schneck | Mar 9, 2017

Is your accounts receivable process both effective AND efficient? How do you know?

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A good starting point is to compare your own performance to a few benchmark data points:

Accounts receivable process metric	Top performers	Bottom performers
The Cost of an Invoice	$.71	$11.50
% of receipts received electronically or automatically	93.0%	46.2%
Number of FTEs That Process Accounts Receivable per $1 Billion Revenue	2.4	10.1
Number of Invoices Processed per Assigned FTE	84,231	6,449
Cycle Time in Days to Resolve an Invoice Error	3.00	8.00
Percentage of Invoiced Line Items Paid in Full the First Time	96.40%	80.37%
Average Cycle Time in Days to Generate Complete and Correct Billing Data	1 day	5 days

Source: American Productivity and Quality Center (APQC)

How are bottom performers different from top performers? Bottom performers rely on manual processes instead of automated document processes, creating 5 huge problems:

Increased errors due to manual processing. Poor performing organizations don’t pay sufficient attention to the accuracy of their bills, invoices or credit terms. Manual processing also means an increased risk that cash payments are incorrectly allocated.
Unnecessary credit risk. In organizations with manual processes, frequently sales reps are allowed to override credit limits or grant discount rates above corporate policy – because the data to effectively manage this process is simply missing – and the organization ends up suffering losses from bad credit risks.
Payment problems linger. Given any significant volume of invoices, organizations with manual processes cannot help but fail to follow up with customers in a timely manner when payments are past due.
Incomplete documentation. Manual processes often fail to generate and distribute complete payment reminder packages. In many instances, even such core payment reminder documents as the original invoice, bills of lading, and proof of delivery are missing, causing customer service representatives to track them down.
Lack of process transparency. A manual accounts receivable process means that management does not have access to the critical process data that it needs to judge and improve performance.

Which accounts receivable process would you choose? An insanely expensive and painfully inefficient $11.50 to process an invoice? Or an automated, reliable, and cost-friendly 71 cents per invoice? Are you ready to see what DocuWare's ECM can save your business? Sign up for a free demo today.

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