UK businesses are wasting time and money handling the payment process, a new study reveals.
The average UK business loses £88,725 per year through clunky payment practices causing friction in their supply chain, according to new research. This equates to almost 6,500 man hours chasing purchase order numbers, processing paper invoices and responding to supplier enquiries.
Businesses estimate they spend on average per week around 55 hours doing manual, paper-based processes and checks; 39 hours chasing invoice exceptions, discrepancies and errors and 23 hours responding to supplier enquiries. They also spend five hours on compliance-related challenges such as handling international taxes and three hours tackling invoice fraud.
Rick Hurwitz, Tungsten Network CEO, comments: “Numerous processes in the financial world remain cumbersome and time consuming when they needn’t be. Technology means we can do away with the tiresome and menial tasks that clog business work streams and instead boost productivity and efficiency. It is surprising that in this tech enabled day and age businesses are still spending so many hours per week managing a process that could be automated.”
The sources of friction identified by the report amount to 125 hours per business per week or 6,500 hours per year. When multiplied by the average hourly UK pay – £13.65, this means UK businesses are losing as much as £88,725 a year resolving payment issues.
When surveyed, the top five friction factors were named as: High proportion of paper invoices received, too many non-PO based invoices, high volume of supplier enquiries regarding invoice or payment status, lack of automated exceptions and lack of automated approval.
Understandably given the wasted money and man power, 36 per cent of businesses state that removing friction from the payment process is a top priority for 2017. However, a fifth state it is not a priority at all – perhaps an indication that the scale and cost of the problem is largely unseen.
Hurwitz continued: “If businesses aren’t tied up chasing invoices or receiving phone calls from suppliers doing the same, they have more time to explore opportunities for growth with existing customers and go after new ones. If all the data from past invoices is easily accessible, opportunities to identify variances that will target inefficiencies are more visible. The technology exists to remove this supply chain friction, which can cause stress, waste time and ultimately impact the wider economy, and we want to challenge UK businesses to seize the day, embrace digitisation and begin enjoying the benefits of a frictionless back office.”