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Financial processes are proving to be a drain on the resources of small and midsize business (SMB) employees, according to a recent report.
The average SMB worker spends 16 hours and 53 minutes per month on financial processes, equal to two full working days on activity unrelated to their role, according to e-invoicing solution provider Baseware’s SMB Finance most recent report, which surveyed 558 business owners and 1,368 employees around the world.
In that two-day period, the most time-consuming exercises include responding to supplier or customer enquiries (2 hours 19 minutes), creating and sending invoices (1 hour 55 minutes) and reviewing invoices to be paid (1 hour 45 minutes).
This coincides with the findings that in Europe, almost half of SMB business owners (46 percent) said they don’t believe their company has a clear procedure for approving invoices to be paid, compared to 38 percent in the United States. On either side of the pond, more than half (52 percent of U.S. employees and 50 percent of European employees) said they do not believe there is a clear process for chasing unpaid invoices.
According to business owners, it takes European businesses eight days and U.S. businesses four days to complete a payment after receiving and processing an invoice. Yet, according to employees, it takes European businesses 10 days and U.S. businesses seven days to complete a payment after receiving an invoice. Survey results suggest that the lack of clear procedure for receiving and sending invoices is also causing disconnect among business owner and employee expectations due to the invoice payment process.
“Although SMB resources are often being stretched to the limit in this challenging economic climate, employees in these organizations are still spending a significant amount of time on tasks that may be completely unrelated to their role,” Baseware vice president of global product marketing John Webster said in a statement. “The SMB Finance findings suggest this resource drain is down to inefficient financial processes and manual systems that are preventing small businesses from transacting successfully with suppliers and buyers, issues that need to be addressed if growth and health cashflow is to be achieved.”
The survey also indicated a significant percentage of businesses are dealing with invoicing manually, adding more time and resources to the financial process. Nearly two-thirds (64 percent) of European SMBs manually invoice customers (compared to 40 percent in U.S.), while 77 percent manually approve or pay purchase invoices.
“As SMBs become larger and implement more automated processes, they continue to deal with smaller organizations with manual paper processes,” the report concluded. “The research suggests that micro organizations may be able to improve supplier relations if they switch to an automated invoicing process, in order to align with other companies more successfully when transacting.”