British firms grapple with outdated finance technology

New research conducted by Open ECX indicates that reliance on legacy technology within finance departments is posing significant productivity challenges and risks of inaccuracies.

The survey, focusing on finance departments in British businesses with over 250 employees, found that 55% of respondents continue to use outdated Optical Character Recognition (OCR) technology. Among these users, a striking 98% acknowledged that this technology results in errors or necessitates manual intervention.

Nathan Ollier, CEO at Open ECX, highlighted the implications of these findings: "At a time when businesses and finance teams are under huge pressure to keep costs down, further compounded by the recently announced employer tax and page increases, it is alarming to see how widespread the use of legacy OCR technology is, and worryingly, the negative effect it is having on both productivity and accuracy within finance departments."

The research, which surveyed 810 finance managers, disclosed that whilst 14% of respondents using these legacy systems experience rare errors, a significant 84% concede that manual intervention is required most or some of the time. This manual handling not only jeopardises business operations but also reduces the productivity of finance teams who must rectify these errors.

"It is clear that many finance teams are struggling with time consuming, manual processes resulting from outdated and complex technologies; the knock-on effect is unmotivated staff and disgruntled suppliers who are being forced to deal with these queries and errors, and ultimately, growth and productivity being held back," Ollier elaborated.

The survey further revealed that 78% of respondents reported manual intervention in processing between 21% and 80% of supplier invoices. In addition, 31% stated they manually addressed over 60% of such invoices. Only 13% claimed less than a 20% intervention rate in their supplier invoice handling.

The duration of time taken to complete supplier statement reconciliations adds to the concern, with over half (54%) indicating it takes more than six days, and 11% noting a timeframe of two to three weeks.

Nathan Ollier stressed, "The level of manual intervention required in the finance and Accounts Payable (AP) function raises major concerns around the significant time being wasted on administrative jobs that could and should be tech-driven."

With automation identified as a crucial priority for the AP function by 46% of respondents aiming to minimise manual intervention, these findings underscore the need for technological advancements to streamline processes, many of which are currently only partially automated.

Financial constraints emerged as a primary hurdle, as 59% of respondents considered budget limitations a significant barrier to advancing their automation goals. Budget concerns also influenced other challenges such as technology (48%), time (48%), and skills (43%).

Ollier concluded, "While budget constraints are likely to determine the level of investment in automation, as we head into 2025, businesses can ill afford to ignore the potential risks associated with legacy technologies. Even where some processes are partially automated, this is still likely to result in a lot of time being wasted on manual processes, keeping teams from higher-value tasks that could be driving more productivity and profit."

He added, "Finance and AP teams want technologies that can automate supplier invoice processing, that can quickly and accurately reconcile statements, and that can empower them to focus on the areas of the job that deliver real and tangible value. Yes, this is an investment, but one that will drive long-term, positive change. Put simply, can businesses afford not to update their technologies and systems?"