The automation of finance processes has been taking place over the past 40 years, taking small incremental steps to improve financial management. In terms of the accounts payable process, automation is now delivering the biggest leap forward in decades, both for businesses and for the accounting practices that provide outsourced services to them.
The technology is here, it’s driving efficiency and it’s a must-have for businesses of all shapes and sizes; in particular accounting practices. Those who embrace it will enjoy increased productivity of up to 90% whilst delivering improved real time financial management to their clients; those who don’t will soon find themselves struggling against their new competitors.
This huge leap in increased productivity is driven by 2 fundamental changes that have already taken place. The first is the growing trend whereby businesses send their sales invoices via email as a PDF (this already accounts for over 70% of all invoices). The second is the utilisation of AI and machine learning to fully automate and process them.
The implications are groundbreaking. For small, growing businesses, it reduces the overhead costs of the accounts payable function by up to 90%, permanently. For accounting practices and bookkeepers, it increases their outsourcing resources capacity by a factor of 6-9 times, delivering an unparalleled competitive advantage.
Another compelling benefit for all accountants is the delivery of a fully auditable compliance best practice process for the entire AP function, including the forthcoming “Making Tax Digital” legislation.
It provides the opportunity for every accounting practice to re-engage with their clients via a unique proposition – saving a huge amount of time and money whilst receiving real time information on your cash requirements and suppliers as a bi-product.
It becomes a small step for accounting practices to offer to remove the headache of the entire accounts payable function from their clients, significantly reducing their client’s cost by doing so. For MD’s of small businesses, this is a very compelling proposition.
The revolution created by an automated invoice approvals process
It is surprising that a considerable proportion of accounting practices remain unaware of the accounts payable approval processes that take place prior to them receiving an approved invoice for posting and payment. It is even more surprising that many also fail to see the huge opportunity this presents, to improve their client’s processes and gain access to larger organisations and the increased revenue opportunities they represent.
All it requires is a change in thinking to achieve a much more efficient way of working, because effective automation is about changing the way we work, not automating how we work today.
The goal becomes to capture every invoice on arrival. For emailed PDF invoices, simply ask the supplier to change the email address they send it to plus implement the discipline of capturing, bundling and scanning the diminishing paper invoices daily. The result is the immediate removal of all paper, together with the considerable and now pointless labour required to deal it from first touch through to filling. Removing the paper at source also delivers instant real time information to everyone that needs to know, whether that is cash requirements reporting or improved supplier account management of critical suppliers.
As 60% to 80% of all invoices are always coded to the same department, this adds the ability to ‘default’ this information at both the invoice header and also for invoice line items. The result is that most invoices are delivered directly to the approver without intervention by the finance team.
The approval process can now take place from any connected device, with automated reminders to keep the wheels turning. On final approval, the invoice is automatically posted to the underlying accounting software, again, without touch.
Proposed payment reports simplify the payment cycle and maintain a full audit trail of payment approvals.
The result is a simple, seamless process, with a complete audit trail from invoice receipt through to approvals, posting and supplier payments, delivering real time financial visibility and productivity savings of up to 90%.
A philosophical shift
The biggest change is undoubtedly philosophical. Accountants have been wedded to paper invoices for as long as double entry bookkeeping has existed and this all too often remains true today. We all live in a digitally interconnected world for just about everything and it is really time for the accounting community to fully leverage software like ours and Xero’s, and follow suit.
The simple act of capturing all invoices on receipt delivers a far more robust process. It delivers far better protection against fraud, stops duplicate invoice payments, enables faster approval processes to avoid late payments of critical suppliers that disrupt supply, provides far better invoice query management, real time reporting to manage cash flow and 100% auditable compliant best practice.
Commercially, it is a very compelling proposition for every MD. The common arguments of concerns over accuracy, reliability and delivering a quantifiable ROI sound more like excuses than a defensible justification against change.
As with all major changes delivered through technology, they require a diligent review. But if that review confirms that all of the benefits are both real and achievable at a justifiable cost, change becomes inevitable