How UK universities risk losing £2 Million annually due to inefficient invoice processes

In a startling revelation, Quadient's recent research has uncovered that UK universities risk losing more than £2 million annually due to disputed invoices. Despite transitioning to digital Accounts Payable (AP) processes, universities grapple with invoicing challenges. This blog will delve into the findings from Quadient's Freedom of Information (FOI) requests, shed light on the underlying issues, and explore potential solutions.

Digitisation alone is not enough

Quadient's FOI requests, conducted from August 2022 to July 2023, found that while all universities have embraced digitalisation for their AP processes, more is needed to resolve their invoicing woes. Each university deals with an astonishing average of nearly 50,000 invoices annually, and ongoing processing issues are wreaking havoc on their financial health and the efficiency of their finance teams.

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Challenges universities face

The FOI uncovered several challenges universities face in their invoicing process:

Late Payments: Shockingly, 69% of universities admitted to making late payments, with an average annual value of £37 million. Late payments can strain supplier relationships and even lead to unfavourable payment terms.

Disputed Invoices: Approximately 33% of universities have encountered disputes with suppliers or customers over invoices. These disputes not only risk lost revenues but can also damage relationships, tarnishing the university's reputation.

The lengthy and complex invoice process

Even with digitalisation, the invoice approval process requires more time and effort. On average, each university involves 466 individuals in approving invoices, most of whom are not part of the finance team. This diverts their focus from core responsibilities.

Moreover, processing a single invoice takes an average of 16 working days, with nearly a quarter (23%) taking 42 days or more. This prolonged process can strain supplier relationships and hinder finance teams from understanding cash flow and expenses.

The need for a smarter approach

Quadient's Senior Vice President of Quadient AP, Karim Ben-Jaafar, emphasises the need for a more intelligent approach to invoicing. While digitalisation is a positive step, it's insufficient on its own. Universities require a more innovative way to streamline their finance functions, gain visibility into potential issues, and resolve them swiftly. This saves time and resources and allows staff to concentrate on their academic work.

UK universities risk significant financial losses due to inefficient invoicing processes. The transition to digital AP processes is a crucial step. Still, it's imperative to implement more innovative solutions that ensure timely payments, maintain supplier relationships, and free up resources for core university activities.