The concerns of your CFO can be viewed differently from industry to industry and company to company. We're going to focus on three of them with respect to the Accounts Payable process.
The Problem with Paper-based Invoices
Financial statements should reflect the work and activities that occurred in the time period for those statements. But if your invoices are still predominantly paper based or still delivered directly to the office or requisitioner of the goods or services, you may still be looking at a lag time (sometimes substantial) between the time the invoice arrives and the time you can evaluate and accrue the appropriate value.
This should no longer be an issue. One of the better approaches is to outsource the 'ingestion' of your invoices, electronic or paper. With the proper controls in place, this could streamline the entry and quality of the information associated with your invoice stream.
Much has been claimed, over the last few years, about increasing the number of electronic invoices over paper-based ones. There seems to be ample agreement that this will improve the speed and quality of your invoices, vendors in the US have lagged behind the rest of the world in managing the conversion. Therefore most of us have to consider an operation that will not only deliver electronic invoices but process the paper ones as well. Having them both validated and made available for both coding and approval online allows you to consider all invoices as 'electronic' because all of your information comes to you that way. Doing this allows you access to the following:
Immediately identify all invoice based accruals for any time period, even before the approval process has completed.
Immediately identify all invoiced unrecorded liabilities. In the past, this has been especially troublesome. The finance department rarely knows it exists if a paper non-contract or non-po based invoice is laying on someone's desk. By capturing the image up front, even if the approval process gets bogged down, finance can still take steps to record it.
During the approval process, identify the burden of work for any person or group within your organization, giving you the ability to estimate approval and payment schedules.
The benefits of AP automation
Automating the workflow for your PO matching and approval based invoices reduces the burden on all those involved in the PO process. These tools and processes, now automated, provide the following benefits:
Straight Through Processing (matching operations) for your PO process, allowing the approval of the order to dictate the approval of the invoice where tolerances are met, lowering the burden of work for all involved in that process. You have the tools to increase accuracy and therefore increase your chances to improve your matching rates if you have outsourced the capture. The less people that need to touch the invoice, the more productive you become.
Automating your workflow (we call this SmartRouting) reduces the time and effort necessary to manage the invoice approval process. This will have the side benefit of also increasing compliancy and reducing the time in audit procedures.
Supervisor visibility into the process gives controls over the workflow, thus being able to balance the work appropriately in real time.
Immediate visibility to the invoices enables a compliant, faster, and more efficient environment.
Productivity for invoice processing alone increases, on average, over 40%. Less people required to manage the problem, less overtime to finish the job, less stress at monthly, quarterly, and year end closings.
Improve accounts payable processes
AP Automation, of course, can not solve all of your working capital problems, but it can manage the outflow of cash as it pertains to most spend. Many companies today are trying to be proactive and strategic in their ongoing efforts to manage cost and working capital. Accounts Payable process improvements can be a source to realize some of the financial benefits associated with working capital.
Having full visibility over all invoices in the invoice approval to pay process gives the predictability necessary to manage cashflow. Since all invoices are visible, their payments can be calculated for each time period and historical data can provide the means to make month to month predictions.
With the appropriate information in your hand, immediately available, so that decisions can be made in time to affect the outcome, you can evaluate the opportunities that exist throughout your business. Small changes to your daily working capital can have a significant impact on available cash. This can have a substantial net impact to your bottom line.
In order to analyze key processes and identify opportunities for improvement, you will need the tools necessary to review the processes and transactional information associated with your invoice spend. A good AP Workflow tool in conjunction with good business practices can provide these
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