Financial Automation Should Become a Top Focus for Remote Companies
Financial Automation Should Become a Top Focus for Remote Companies
Financial automation is not a top focus right now with remote companies. Your accounts payable people are almost certainly struggling.
Isolation from other employees in the organization often occurs with the Accounts Payable department. On top of that, while businesses put AP teams in charge of paying invoices and managing expenditures, the AP teams often struggle with various complexities associated with that process.
One contributing factor to making life difficult for your AP people is that, all too often, every business unit has its own system of expense approvals. That being the case, the purpose of the invoice, the expenditure approval, and vendor payment clearance, were all unclear to the AP departments.
Work-from-Home (WFH) Adds Another Layer of Complexity
Existing difficulties associated with the smooth functioning of your AP department became even more pronounced during the pandemic of 2020. The sudden, unforeseen wave of “going remote” led to less communication between business units and AP. It became even more apparent that other business units do not see their relationship with AP as mission-critical.
Fortunately, there is a solution to be found in AP automation services such as Stampli. However, the key for business owners is that any AP financial automation system must do more than simply automate the payment of digitally approved invoices.
“That’s the easiest part of the process,” according to Stampli CEO Eyal Feldman. Feldman responded to a question about the challenges companies face when trying to get their approved vendors paid on time. “Most AP tools focus on the payment component of the Procure to Pay (P2P) Process, but issuing a payment is the final step,” he said. “Ninety-percent of the challenges associated with getting vendors paid on time happens during the process preceding the payment, which includes verifying and getting the proper approvals to pay the invoice.”
Instead, financial automation should focus on providing a solution for the collaborative effort required between AP and the rest of the organization. Business owners should keep looking until they find an AP automation system with built-in collaboration and streamlined access to all necessary information. Things like documentation, purchase orders, invoice history, and whatever else necessary all contributed to businesses making informed decisions. In addition, solving AP communication issues makes for a faster, more accurate approval process. This helps businesses pay their vendors on time.
Using Financial Automation to Address the WFH Impact on Accounts Payable
According to Feldman, the accelerated rush to WFH in the wake of the global Covid-19 pandemic has impacted AP departments significantly. “Finance departments that relied on manual, paper-based processes suffered during the pandemic and had to urgently resolve this to be productive and effective in this remote environment,” he said.
For starters, businesses needed to rapidly digitize manual processes. CFOs and finance leaders everywhere were forced to push the priority for digital transformation to the top of the list. They needed to find remote-friendly tools that provided collaboration and integrated with their existing finance and accounting systems.
At the time, businesses focused on solving important everyday tasks. For example, businesses focused on approving and paying invoices. As a result, resolving communication and collaboration issues that were already in place prior to vacating office space wasn’t necessarily on the radar.
How Businesses Can Effectively Assess Current AP Systems
Many businesses remain hyper-focused on the payment and approval process as a measure of success, and of course, that’s completely understandable. However, there’s no denying the importance and relevance of these key financial indicators for gauging business performance.
In truth, however, there are many metrics to consider. If your AP team doesn’t know or have time to understand other key metrics because they’re just too busy getting invoices approved and paid, it’s probably time to automate.
Listed below are four additional metrics your AP people need to be aware of as they make the transition to a business model that includes an increase in WFH employees and vendors. You should make each of these metrics available. Additionally, you should clearly communicate to not only your AP team but key stakeholders across your entire organization. Finally, if you are looking at an AP financial automation system that does not offer this level of transparency and granularity, ask your AP folks for input.
1. Tracking, Reporting, and Leveraging Vendor Discounts
What percentage of discounts does your AP team currently capture for on-time payments or early pay each reporting period? Is your business leaving money on the table simply because an invoice sat on someone’s desk a few days too many? Rooting out and eliminating these oversights can add up quickly.
Being aware of discount payment opportunities is likely to highlight additional ways to achieve savings and reduce your overall AP costs. Taking even a small percentage off an invoice for prompt payment can add up over the course of time. AP automation can free time for your AP team to focus on increasing prompt-payment savings exponentially through negotiations with other vendors in your supply chain.
2. Increased Focus on Supplier Relationships
How many supplier-side inquiries, discrepancies, and disputes are your AP team dealing with? Unfortunately, in far too many cases, businesses are just trying to stay ahead of the invoice stack and approve payments just to keep the business operational. Ask your AP people if they’ve ever had misgivings about paying a specific invoice and they might list several.
If there is a specific issue, you need to address with regard to a particular invoice? Additionally, is there an ongoing problem with a vendor? Automating AP paperwork will give your people the “breathing room” they need to do a better job. Specifically, they will do a better job of following up on any questionable transactions.
3. Spotting Inaccurate and/or Duplicate Payments
What percentage of monthly payments are incorrect? Who made them, and why did they make them? These are vital statistics for assessing where your business might be leaking cash unnecessarily. Most often, inaccurate payments are the result of simple mistakes, but not always. AP financial automation brings both clarity and increased accountability.
Having a better understanding of inaccurate or duplicate invoicing very often leads to uncovering further training needs. This could also lead to process problems or software issues. Understanding the rate of duplicate payments can identify two things. First, they can identify whether a vendor is double billing, in addition to whether there are other potential risks of fraud.
4. Tracking Team Efficiencies
Which team members process the most invoices? Automation can show you who is using their time efficiently and who is struggling. It’s good to hone in on the team members experiencing problems. This can help you identify whether or not you need to resolve an issue of better training methods. Other issues you may need to look into could include process improvements or distribution of workload.
The AP roadblocks and complications created by an increased need for remote work aren’t going away any time soon. Unchecked, these issues can cause additional friction and distancing between AP and other business units. To smooth things over, many businesses would benefit by partnering with AP automation services. It’s okay if you haven’t yet considered this option. It’s helpful to start with a little research simply by asking your AP employees for feedback.
Image credit: nataliya vaitkevich; pexels; thank you!
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