• FREE RESOURCES
        • Accounts Payable
          Finally! The trick to securing greater T&E compliance
          Benefits
          Rooting out folks who don’t belong on your health plan: A 6-point dependent audit checklist
          IT
          3 costly misconceptions about biz email compromise
          Credit and Collections
          Collecting via email: 4 must-make moves in your subject line
          Accounts Payable
          5 Tough-to-spot signs that an invoice is fake
  • PREMIUM CONTENT
        • Staff management
          120 Proven Communications Tips for Today’s CFO
        • Payroll
          Handling Nonexempt Employee Pay: Stay Compliant and Avoid DOL Audits
          Accounts Payable
          T&E Best Practices: Complete Guide to Ensure Compliance
          Payroll
          Payroll Best Practices: 4 Ways to Save Time and Money
        • Staff management
          Email Best Practices: A 6-Question Quiz
          Staff management
          Innovative Communications Strategies: An Email Case Study
          Staff management
          A 5-part Framework for Successful Workplace Communications
        • SEE MORE
          PREMIUM RESOURCES
  • CORONAVIRUS RESOURCES
  • LOG IN
  • SIGN UP FOR FREE

Resourceful Finance Pro

  • FREE RESOURCES
        • Accounts Payable
          Finally! The trick to securing greater T&E compliance
          Benefits
          Rooting out folks who don’t belong on your health plan: A 6-point dependent audit checklist
          IT
          3 costly misconceptions about biz email compromise
          Credit and Collections
          Collecting via email: 4 must-make moves in your subject line
          Accounts Payable
          5 Tough-to-spot signs that an invoice is fake
  • PREMIUM CONTENT
        • Staff management
          120 Proven Communications Tips for Today’s CFO
        • Payroll
          Handling Nonexempt Employee Pay: Stay Compliant and Avoid DOL Audits
          Accounts Payable
          T&E Best Practices: Complete Guide to Ensure Compliance
          Payroll
          Payroll Best Practices: 4 Ways to Save Time and Money
        • Staff management
          Email Best Practices: A 6-Question Quiz
          Staff management
          Innovative Communications Strategies: An Email Case Study
          Staff management
          A 5-part Framework for Successful Workplace Communications
        • SEE MORE
          PREMIUM RESOURCES
  • CORONAVIRUS RESOURCES
  • Accounts Payable
  • Credit and Collections
  • Payroll
  • Accounting
  • Benefits
  • Finance Technology
  • Sales & Use Tax
  • More
    • Employment Law
    • Strategy
    • Policy and Culture
    • Fraud
    • Budgeting and Forecasting
    • Banking
    • Staff Management
    • Cost Control
  • Finance Technology
2 minute read

Digital maturity: How does your finance department stack up?

digital maturity how does your finance dept stack up
Alyssa Pedrick
by Alyssa Pedrick
April 9, 2020
  • SHARE ON

In an uncertain and evolving world, digitization is necessary. Your A/P and A/R teams can’t be bogged down by outdated routines and mundane work.

These current times, when companies have been forced to think fast and take operations remote, are proof of that.

But before your finance department can improve its processes, you first need to take inventory of where it stands.

When it comes to A/P maturity, a recent report from Levvel Research outlined three main levels: Novice, Mainstream and Innovator. Similarly, research from the APQC measures A/R maturity in terms of high-performers, medians and low-performers.

Take a look at each level to determine where your finance department falls and what you can do to launch forward.

Level 1

The average Level 1 finance department:

  • takes 45 days to process an invoice from receipt to approval
  • boasts a $15 cost per invoice
  • captures 18% of discounts
  • has a DSO of 48 days, and
  • uses 0.07% of total revenue to process A/R.

Level 1 departments are still mostly manual. Paper invoices and checks dominate. These teams, usually through no fault of their own, may have less visibility and encounter more errors and delays.

With the go-ahead from you, your A/P and A/R leads can get more proactive on digitization. Encourage them to see how much money manual processes are costing your company, do some research and develop ideas for tech investments.

Level 2

The typical Level 2 finance team:

  • takes 23 days to process an invoice from receipt to approval
  • boasts a $6.70 cost per invoice
  • captures 40% of discounts
  • has a DSO of 36 days, and
  • uses 0.04% of total revenue to process A/R.

Level 2 teams are a mixed bag of paper and electronic. They may have digitized certain process steps (e.g., a data capture tool to replace keying) but lack fully streamlined workflows.

A combination of paper and digital processes can lead to confusion if not managed correctly. For CFOs at Level 2, it’s a good idea to ask A/P and A/R to fully map their processes. (Visuals can be a big help here.) Have them see what’s manual, what’s digital and come up with a long-term plan. For some, that may mean looking into a comprehensive solution. For others, it may be a piece-meal project.

Level 3

The average Level 3 department:

  • takes 5 days to process an invoice from receipt to approval
  • boasts a $2.36 cost per invoice
  • captures 75% of discounts
  • has a DSO of 30 days, and
  • uses 0.02% of total revenue to process A/R.

Level 3 departments are mostly or fully electronic, allowing them to spend less time on tactical tasks and more time positioning A/P and A/R as strategic functions.

Consider how these teams could bring additional value to the company through strategic work, such as deep data analysis, dynamic discounting, above-and-beyond vendor service or an interdepartmental initiative.

Alyssa Pedrick
Alyssa Pedrick
Alyssa, a member of the Resourceful Finance Pro staff, has written extensively on business and finance for several years. She has produced content for accounts payable professionals and finance executives and has developed whitepapers and infographics for the finance and accounting industry.

Get the

Resourceful Finance Pro Logo

Newsletter

With Resourceful Finance Pro arriving in your inbox, you will never miss critical stories on accounting, benefits, payroll & employment law strategies.

  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • This field is for validation purposes and should be left unchanged.
Resourceful Finance Pro Logo
  • ABOUT
  • CONTACT
  • WRITE FOR US
  • ADVERTISE WITH US

Resourceful Finance Pro, part of the SuccessFuel Network, provides the latest Finance and employment law news for Finance professionals in the trenches of small-to-medium-sized businesses. Rather than simply regurgitating the day's headlines, Resourceful Finance Pro delivers actionable insights, helping Finance execs understand what Finance trends mean to their business.

Privacy Policy | Terms of Service
Copyright © 2022 SuccessFuel

WELCOME BACK!

Enter your username and password below to log in

Forget Your Username or Password?

Reset Password

Lost your password? Please enter your username or email address. You will receive a link to create a new password via email.

Log In

During your free trial, you can cancel at any time with a single click on your “Account” page.  It’s that easy.

preloader