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EIPP Solutions Maximize Procurement Savings
03.02.2005 (ePaynews/aberdeen) Automated invoice reconciliation and payment solutions are crucial to procurement-related cost savings, according to a new Aberdeen Group report. If corporate accounts-payable processes are automated with electronic invoice and payment (EIPP) solutions, savings of 2 to 17.5 per cent of each dollar spent by an enterprise, are possible. With supplier expenses accounting for over 50 cents of all dollars earned by corporations, automated EIPP solutions can achieve per-invoice cost reduction improvements of 50 to 60 per cent on average, Aberdeen’s new report indicates.
Over two-thirds of enterprises surveyed in Aberdeen’s report, “Harnessing Payables To Capture A Second Wave Of Procurement Savings”, receive 80 per cent or more of their invoices in paper format. Paper-based processes dominate procure-to-pay cycles but automation brings savings by improving visibility for invoices and payments. However, automated invoice reconciliation and payment solutions lagged in the first wave of e-procurement, with over 60 per cent of managers interviewed by Aberdeen, unable to maximize savings due to the lack of centralized dataflow.
While less than 60 per cent of corporate spending is aggregated, cleansed or classified, the tracking capabilities of automated EIPP solutions can achieve spend reduction percentages of 1.3 per cent to 5.5 per cent. EIPP can also reduce dollar ‘leakage’ by eliminating duplicate invoices or payments, accelerating electronic POs for supplier discounts of 2 to 4 per cent and deferring payments for improved liquidity. In short, adding EIPP technologies to the back-end of procure-to-pay processes enables corporations to close the procurement loop and realize significant savings.