1: Complete and Clear Visibility
Visibility is a critical issue in most AP departments, many of which are still paper based.
Aberdeen Group’s Procure-to-Pay Study found that 80% of invoices are still paper, leading to a multitude of visibility issues. Lack of clear visibility starts with the invoice receipt process. Invoices tend to be sent to numerous field offices rather to an Accounts Payable designate.
These pre-approved invoices are then manually forwarded to Accounts Payable and entered into the Enterprise Resource Planning (ERP) system, providing zero visibility on the front end. Delays can arise from invoices sitting on managers’ desks for days which can also lead to unnecessary rush invoices when line-of-business managers demand quick payment to maintain supplier satisfaction.
When Accounts Payable departments are chronically backed up at the end of periods, there is a risk of not recognising liabilities. Incomplete accruals can understate expenses and overstate income. This can lead a company susceptible to financial statement cut off fraud occurring as companies get desperate to show earnings or reduce losses. Lost paper invoices can also obscure a company’s visibility into liabilities. These consequences of a paper based system argue against continued reliance on this outdated model.
2: Accelerate Period End Close with Greater Accuracy
Companies are being forced to close their books more quickly and more accurately.
While there are benefits such as delivering meaningful information to management in a timely fashion enables faster and more tactical decisions, closing the Accounts Payable books can become very difficult. A faster, more accurate Accounts Payable close can be achieved by
The right Accounts Payable automation in place can lead to more accurate closings. Invoices and all backup information are automatically entered into the ERP and workflow leverage the ERP’s account codes and approval framework to create a permanent record of every transaction. Every step of the close simplifies, allowing for organisations to perform this activity more quickly and accurately.
3: Turbo Charge Productivity
Accounts Payable department is hindered with paper, resulting in loss of productivity due to filing, retrieving, and faxing, copying, mailing or looking for papers that have been misplaced, misfiled or lost. Further comprising productivity is that Accounts Payable processes are too complex. The number of manual internal controls and little standardization as well as Accounts Payable department interruptions leads to increasing loss of productivity.
4: Leverage Your ERP Investment
ERP platforms, despite having powerful capabilities, have struggled to meet expectations or deliver on their value proposition. According to a PricewaterhouseCoopers survey, only 36% of finance executives are confident their technology spending is yielding an optimum return.
The lack of value in ERP implementations is due to the use of old, manually intensive processes that hamper the system’s potential. The ERP is an excellent repository for all financial data, it is not designed to support the processes around each of those transactions. The original invoice being stored in the ERP provides access to that document, but has no impact on how it got approved, whether it received the required signatures or whether proper policies were followed.
The key to unlocking the value in an organisation’s ERP investment is to develop simplified and standardized process for repetitive tasks such as invoice receipt, review and approval. Companies have invested in sophisticated ERP implementations, but old pre-ERP processes are simply transferred to work with the new system, leading to inefficiencies and expensive communications and collaboration. Through simplifying and standardizing processes, removing unnecessary steps and improving overall efficiency. All captured information needs to be tightly integrated with a consistent set of processes to be able to maximize efficiency, speed, visibility, cost reduction and controls. A streamlined process also requires all participants, regardless of position or experience, to have access to all appropriate information while interacting intuitively and intelligent with the transaction.
5: Improve Quality
Errors can be costly through departmental productivity and corporate reputation. Companies need to understand where and why errors occur and to systematically address and eliminate them to improve quality and reduce costs.
Each step of the AP process is time consuming, and the cost of one error can be significant. Paper based processes are known to have higher error rates – keying errors, matching errors, lost and/or misfiled documents etc.
Errors can also impact quality of service since they irritate vendors and frustrate internal clients. A quality program is the cornerstone of any effort to develop a “continuous improvement culture”. Having a baseline understanding of the time and resources required to perform a function and tracking progress as quality initiatives are implemented. Quality programs pay direct dividends.
6: Facilitate Spend Analysis, Planning and Forecasting
Organizations must accurately budget, plan and forecast to maximize business performance. If corporations can’t accurately analyse previous or current spending trends, their ability to plan and forecast is severely affected.
A major impediment to accurate budgeting, planning and forecasting is the inability to analyse costs at the appropriate level of detail. The lack of transparency makes it impossible to perform the proper level of analysis that informs future planning activities and realizes cost savings.
Proper invoice coding is also essential. Coding frequently introduces complexities into budgeting, planning and forecasting cycles because it is error prone. Resolving and re-keying coding errors can be time consuming and inefficient, but if not done properly, the errors are prolonged and create enormous gaps in an organisation’s ability to analyse previous spending.
7: Embrace Best Practices
Accounts Payable departments are not able to implement best practices without clarity in corporate policies and procedures. Lack of a standard codified approach to the disbursement process creates a multitude of problems for AP:
The most effective path to AP best practices is the automated enforcement of policies and procedures via workflows that incorporate best practice policies. Automated workflows that enforce AP business rules can ensure that all transactions
8: Strengthen Internal Controls
All finance professionals are aware of the fraud risks their organisations face. The PricewaterhouseCoopers Global Economic Crime Survey found that 45% of companies worldwide are victims of fraud. In addition to revenue loss, significant collateral damage includes loss of reputation, decreased staff motivation and declining business relations. There are three main categories of fraud faced by AP departments include Corruption, Asset Misappropriation and Fraudulent Statements.
The way to gain control is with best practices that create the foundation for a strong controls environment. Through simplifying processes and centralization, automated and preventative controls and technology leverage.
9: Optimize the Company’s Biggest Asset: Cash
Accounts Payable is about getting the bills paid, but the process can be costly, paper intensive and time consuming. A PricewaterhouseCoopers study states that an average AP organisation makes 19 copies for each document, loses 1 out of every 20 documents and spends 25 hours recreating each lost document. Other paper based costs include storage, document transportation, supplier dispute resolution, internal and external audits, duplicate payments, late payments, penalties and errors.
Best practice workflows ensure simple, standardized processes where documents are brought online at the outset are fully integrated with the ERP and are then routed to all participants in a given business process including non-ERP users.
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Vision360 Enterprise Accounts Payable Automation Solution by BlueCreek Software reduces time wasted chasing down paper invoices by automating invoice approvals, eliminating manual data entry, eliminating paper invoices and reducing processing costs.