Yooz has published the fourth edition of its State of Automation in Finance report. The report was created with the AP Association. It is based on a survey of 1,550 finance and procurement professionals working in the US, the UK, France, Spain, Belgium, Switzerland, Luxembourg, South Africa and the UAE, conducted by Sapio. The report highlights the evolving state of automation and the challenges and priorities for finance decision-makers in 2024.
The report is 34 pages and divided into three sections:
- Driving Productivity
- Benchmarking AP performance
- Prioritising technology to deliver financial value
It begins with nine key findings from the global report and ten key findings from the UK data. There are some interesting findings, including:
- Increasing the use of technology (36%), cash flow optimisation (35%) and reducing overheads (31%) are the top priorities for UK businesses in 2024
- Only 23% of UK organisations say they are fully prepared for e-invoicing in 2024
- The average approval process for invoices in the UK is 35.75 hours
- The average cost of processing an invoice in the UK is £13.68
The fourth report notes how finance leaders are moving forward with digital transformation. It also links Accounts Payable solutions with ERP systems to improve productivity.
Laurent Charpentier, CEO of Yooz, commented, “After several years of reactive measures, our 2024 annual research confirms that finance decision-makers are now proactively looking to deliver business value.
“The emphasis on improving productivity and obtaining better information to facilitate informed decision-making demonstrates a clear commitment to elevating the strategic role of the finance department within the business.”
What is in the report
Each section contains a mix of data points, analysis and simple data visualisations. The survey appears to have included no qualitative element. Also, there are no quotes from industry analysts, Yooz leaders or even from the AP association. Hopefully, the fifth report will rectify that.
Driving Productivity
The respondents are seeing clear benefits from AP automation and 37% are looking to increase the use of technology over the next twelve months. While the benefits of AP automation are well documented, the authors point out that there is a “correlation between increased productivity and enhanced data accuracy.” That increase in quality bodes well for AI, where data quality is critical.
Not only is the data better, but AP automation is making a difference in the time spent to process invoices. Globally, managing vendor invoices takes 26% less time than in 2021. Finance teams are transforming, if slowly. In fact, only 28% of respondents viewed their organisation as advanced, while 31% were lagging on their digital transformation journey.
Benchmarking AP performance
This section looks in more detail at where organisations are spending time in the AP process. One issue that subsequently leads to late payments (or an excuse for late payments) is the time taken to validate late payments. Worrying, the time taken to validate an invoice has increased every year since 2022, from 16,6 hours to 24.8 hours.
It is clear that automation is needed. However, does finance want to pay suppliers faster? Legislation to force faster payments is stalled in the UK, and cash flow is always top of mind for businesses. A qualitative question might have produced some insights.
Automation works, though. Those organisations that are digitally mature, validate payments within 2 hours. Surprisingly, smaller companies validate invoices faster.
While it costs UK organisations £13.68 to process an invoice, in Luxembourg, the cost is £18.52, though for Spain, it is only £12.03. Can the combination of AI and automation reduce that further and faster?
The report also considers the impact of late payments and also considers data quality within the financial system. Only 27% feel confident that the data can be analysed effectively.
Prioritising technology to deliver financial value
Excel spreadsheets are still clinging on within finance teams. With 16% still using spreadsheets to automate AP processes (let alone elsewhere!) However, automation is creeping up, with 13% now leveraging ERP workflows or ERP alongside AP automation solutions. The question is when this will reduce the reliability of spreadsheets, whose use has been consistent over the last few years.
When integrating AP and ERP solutions, which 43% say is important, the authors cite four important factors:
- Native connectors
- Bi-directional information transfers
- Possibility to associate an accounting document with an accounting entry
- Global interoperability between solutions
This is the direction that finance leaders are heading. There are competing priorities for investment, though. The respondents noted their top three priorities for investment in the next year:
- Financial Analytics – 36%
- Cyber Security to reduce the risk of fraud – 31%
- Artificial Intelligence (AI) and/or Machine Learning (ML) – 29%
AI promises to help with automation and some issues with data quality. As more vendors, such as Yooz, embed it into their systems, the responses to future surveys should see an uptick in data quality and automation. Finance teams are starting to consider and implement AI tooling within their functions.
Remarking on the increase in the use of AI in UK finance departments, Charpentier added, “Organisations leveraging Yooz AP automation have gained unmatched benefits thanks to our existing AI technologies and will be perfectly placed to explore emerging and fast-developing innovations from our AI labs.
“Embracing this technology in finance departments will see productivity soar with nearly instantaneous invoice processing and validation, alongside access to both real-time and historical data. Finance decision-makers who do not shy away from the evolution of AI in their departments will be in a prime position to make informed decisions quickly and add real corporate value.”
Enterprise Times: What does this mean
The report is well laid out and contains some worrying statistics. Finance leaders have conflicting priorities, but as with the rest of the business, they need to look to automation and AI to help increase productivity. Some organisations are slipping behind. While finance may not generate revenue, an inefficient finance team can create problems for other areas of the business and upset customers and suppliers.
The leaders in this space who have already automated, are more efficient and are showing clear benefits from doing so. One example is being unable to validate invoices in a timely way could lead to organisations missing out on early payment discounts.
