Weak Finance Processes Hitting Global Business Profits

Accounts Payable Teams are Missing Early Payment Discounts, Incurring Late Payment Fees and Reneging on Payment Altogether - Largely Due to Human Error

GUILDFORD, England, July 7, 2010 -

    - 35% of Accounts Payable Departments Have Not Paid Suppliers Due to
      Internal Finance Errors
    - 24% Know Their Own Organisation has not Been Paid Due to
      Customer/External Finance Mistakes

Weaknesses in finance processes are resulting in additional costs for
businesses and even causing invoices to go wholly unpaid, according to a new
report released today by Basware (www.basware.com/Pages/default.aspx).
Speaking to 550 Accounts Payable (AP) departments around the world the report
discovered that invoice and cross-departmental errors have caused 35% to
leave suppliers unpaid, and 24% know that their own invoices have not been
settled for the same reasons. Over a quarter (26%) of participating AP
departments have even paid the wrong supplier when processing an invoice.
With AP department inefficiencies largely attributable to human error, there
is a clear need for appropriate controls and automation improvements.

Processing an average of 93,000 invoices per year, participants state
that 7% of invoices contain errors, equating to more than 6,000 erroneous
invoices per year for a typical enterprise taking part in the study. Lack of
communication between AP and procurement departments is highlighted in the
report as a cause of AP errors in a quarter (24%) of companies. Just 40% of
invoices are based on purchase orders (POs), and where POs do exist, a third
(32%) of finance departments have difficulty reconciling invoices against
them.

When it comes to payment, in the last 12 months 30% of respondents have
missed early payment discounts and 27% have incurred late payment fees.
Despite this, 59% believe that the AP department has a positive effect on
profitability.

With direct control over cash flow, finance professionals are under
growing pressure to strengthen controls, drive out costs and to increase
process efficiency. However, while 60% of AP survey participants think that
increasing automation removes payment and accounting errors from the
business, and 62% of respondents believe that automation can improve
profitability, purchase-to-pay process automation tends to be partial and is
not integrated. Automating finance and procurement processes not only results
in reduced processing times and subsequent cost savings, it also provides
improved control over who spends money and what they can buy - leading
ultimately to improved business processes and capital management.

The report highlights the 'distance left to run' in achieving this vision
of a modern and efficient AP department. 44% of respondents believe that
e-invoices will fully replace manual paper-based invoice handling in the next
5 years. With so many still relying on manual, paper-based processes, much
work needs to be done.

Basware's SVP of Global Marketing, Steve Muddiman commented on the
report: "The Lost in Transaction survey shows that the engine room of
corporate cashflow - the Accounts Payable department - is still far from the
automated, error-free status it desires. According to our research, it takes
companies 18 days on average to process an invoice through the AP department,
by automating the process, this can be cut to a fraction of the time. Long
processing times prevent companies from reaping the benefits of early payment
discounts, and driving cost savings across the business. Companies cannot
afford to leave these processes out in the wild but should consider system
and process improvements as an ongoing evolutionary investment that bring
order to chaos, and ensures finance is concerned with profit margins and not
inhibited by avoidable margins of error."

For a full copy of the Lost In Transaction insight study, please visit
www.basware.com/transaction.

About Basware

Basware is the global leader in purchase-to-pay solutions with more than
1,500 customers and 1,000,000 users in over 50 countries around the world.
With Basware, organizations can reduce the cost of buying and paying for
goods and services and gain visibility and control of their entire spending
process by automating manual processes, from sourcing, contract management,
purchasing and supplier collaboration to invoice automation. Basware
solutions and services enable substantial cost reductions across businesses
and deliver value by providing compliance and control, as well as fast return
on investment. The solutions are distributed and implemented, either on site
or as a service, in Europe, the US, and Asia-Pacific through an extensive
network of Basware offices and business partners. www.basware.com

About the research:

The Lost In Transaction study was conducted for Basware by
independent research company Loudhouse (
www.loudhouse.co.uk/loudhouse.swf) during May and June 2010. The study
polled 550 Heads of Accounts Payable from organizations with between 1,000 to
50,000 employees.

Telephone interviews were conducted to present a proportional picture
from across the globe, with 100 respondents surveyed in each of the USA, UK,
Scandinavia and Germany, with 50 responses each from Australia, Benelux and
France completing the total of 550.

A typical enterprise in the Lost In Transaction study:

    - Has 11 full time employees involved in AP invoice processing
    - Processes 93,000 invoices per year
    - Takes 18 days to process an invoice (receipt to payment)
    - 12% of invoice handling time is spent managing exceptions
    - 1 in 5 (19%) of incoming invoices are e-invoices
    - 7% of incoming invoices contain errors
    - 58% of incoming invoices are based on POs

Press contact: Lakshmi Rajendran / Sarah Martinez, Octopus Communications, baswareuk at octopuscomms.net , +44-845-700-655. Karen Airey, Head of Marketing, Basware UK, karen.airey at basware.com .