UK universities risk losing more than £2m a year on average from disputed invoices, according to Freedom of Information requests by Quadient, a leader in helping businesses create meaningful customer connections through digital and physical channels.
A series of requests exploring data from 1st August 2022 until 31st July 2023, found that despite 100% of universities digitising their Accounts Payable (AP) processes, for example via email or online portals, many still cannot overcome invoicing challenges. With each university receiving on average nearly 50,000 invoices a year, ongoing processing issues not only impact the productivity of finance teams but the financial health of the university.
The FOI laid bare the challenges universities face in the invoicing process, including:
- 69% of universities have paid an invoice late, worth on average £37 million a year;
- 33% have had a supplier or customer dispute an invoice, potentially leading to lost revenues, damaged relations, or worse payment terms
Commenting on this, Quadient AP senior vice president, Karim Ben-Jaafar, said: “It is encouraging to see that universities have digitised invoice processing, but there is clearly still a lot of work needed to help finance teams work effectively.
“The problem with just digitising the process is that things can still fall into the cracks. Given the huge number of invoices and large sums that universities process each year, these findings are likely to be just the tip of the iceberg. At a time of economic uncertainty and when many institutions are under pressure, these inefficient processes increase the risk mistakes that could cripple the university’s finances.”
The invoice process itself is still very time consuming, cumbersome, and involves numerous individuals. The FOI requests found that at each university, 466 people on average are responsible for approving invoices. Most of these people won’t be finance team members, meaning the more time they spend on approving invoices, the less they spend on their core duties.
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By GlobalDataIt also takes on average 16 working days for a university to process each individual invoice, with almost a quarter (23%) taking 42 days or more on average. This lengthy process could harm relationships with suppliers while preventing finance teams from having an accurate overview of cash flow and costs.
Ben-Jaafar added: “Universities need a more intelligent way of dealing with invoices because the current process is inefficient.
“When so many people are responsible for approvals and there is no clear audit trail, it’s easy to lose sight of who has ultimate responsibility. But that creates a messy web of invoices that can easily end up with invoices not getting paid or even worse, being paid twice. Digitising Account Payable processes is a great first step but isn’t enough on its own. Universities need a smarter way to streamline the finance function, and to gain the visibility to understand when something has gone wrong, and quickly fix it. This ability will give staff the time and resources to focus on the important work that universities do.”
