Industry sectors, like Accounts Payable, are facing amazing opportunities to be able to streamline their workflow processes through automation, making them more productive and valuable than ever before.
For decades the industry has been fraught with problems with existing processes and procedures, and no matter how much they change or evolve, there is still one element that will be the proverbial ‘spanner-in-the-works’ every time; paper.
In an era where digital reigns supreme (online ordering, purchasing, account management, etc.), Accounts Payable still relies heavily on the physical paper trail to function. Invoices, purchase orders, remittance notices, etc., all fluttering around the office until vendors are screaming down the phone wondering when their payment is coming through. That’s when the scramble begins to find the paperwork. How does this affect your business?
Ever had to move through traffic at a snail’s pace, not knowing why everything has slowed down? As you continue forward you notice the lane you are in is merging with another, and once in the lane you see a car has broken down and is blocking traffic, but once you get passed the car everything speeds up and moves like normal.
That is a bottleneck.
And the same thing can happen in your workflow process. When you need to rely on people to push the paperwork down-the-line, things can go wrong. People forget, while their intentions may be honourable at the beginning, things can change quickly. People get busy and the document can end up just sitting on their desk, or they give it to someone else to action. Maybe it’s misplaced, which then means a new one needs to be requested and the process has to start again.
What happens when this occurs?
What if your company was in the construction industry? Suppliers aren’t paid, materials aren’t delivered, work halts and your customer is losing money every day work is being delayed. This could result in seeking compensation in the form of a lawsuit.
The further flow-on is you now have a black mark against suppliers because your invoices weren’t paid, or paid late, and the customer is spreading your name around, but not for the reasons you want.
All of this because some invoices were forgotten, lost or just sitting on someone else’s desk. However, if the process was automated, it would pass through varying checkpoints digitally, making it far easier to track its progress and help with pushing it further down the chain of approval.
For some businesses the thought of digital transformation can seem daunting, and sometimes ends up in the ‘too-hard-basket’. However, there are some seriously significant advantages to digitizing your workflow process and system.
With compliance a big part of business, having an automated process makes it simpler to adhere to internal policies and external mandates. An automated workflow system can be set up to follow proper procedures that will be recorded for auditing purposes and will prevent the creation of fraudulent invoices.
A physical document system has the potential to place a business in a far worse position than can be imagined. Aside from monetary penalties, a business’ reputation can be tarnished should they neglect compliance around their workflow processes.
More of a happy ‘side-effect’, a digital automated workflow system will be able to capture data that would be beneficial to your business and its decision-making process. The type of data that could be captured and utilised includes, but is not limited to you:
- Employee productivity: this is a great way to measure KPIs and set new goals for employees.
- Transaction volumes: can help determine if additional staff is required to help with the processing of invoices and purchase orders. It can also help provide insight or bring to the fore pain-points within the Accounts Payable division of the business.
- Financial liabilities: you will be able to determine what transactions are being actioned regularly, which can then help with budgeting requirements and reporting to help with forecasting.
- Vendor interactions: the processing of invoice and purchase orders can be translated in to the frequency and volume of interaction you have with your vendors. It can provide valuable insight in to what they are buying from you and how often.
As we can probably agree, a manual workflow can cause untold inefficiency within your Accounts Payable department. Two of the biggest problems is around missing or duplicate invoices. Missing invoices can lead to missed or late payments and depending on the vendor there may be penalty fees imposed for late payments.
Another issue is that of duplicate invoices and the biggest problem being double-handling. Having an invoice processed twice means it requires twice the amount of time to process and approve. Which comes to the second problem, double payment. This has an effect on cashflow and budgets, and in most cases happens more than once a month.
There is an old saying that ‘time is money’, and it’s true. With paper invoices, and even electronic ones, there has to be someone to process them in to the system, approve them, move them, file them and store them. Also, if there are any faults within the process the costs can grow exponentially.
An automated workflow system helps invoices enter the system quickly, route them automatically to the people along the approval chain and can be accessed from anywhere, which reduces the amount of labour required to maintain or even increase productivity and quality assurance.