According to a study done by the Accounts Payable Network, the three major challenges facing Accounts Payable departments during a struggling economy are:
1. Cost Reduction
2. Process Improvement
3. Increased Control
The story of this accounts payable department will show you how an AP department that was once over-burdened with too many invoices and purchase order (PO) documents (suffering with late payments and overpayments because of lack of organization) implemented an electronic process that reduced their costs, improved their business processes, increased their security, and organized the information in their department.
The economic fury strikes yet another business, and its AP department is forced to reduce their headcount requiring them to manage the same amount of work with half the people. What to do? The business process had to be restructured now that the department only had half of the initial staff.
This presented some major challenges, resulting in a domino effect. The staff couldn’t keep up with the workload… forcing invoices to be paid late… charging the company an excess in late fees… and tragically missed opportunities for savings because they could not get organized and on track to pay invoices early or on-time. Perhaps they and other businesses could make use of digital solutions to chase up payments and automate reminders – Chaser, Credit Control Automation for Xero, QBO and Sage are popular options of this kind of thing.
With fewer employees, the staff was having an extremely difficult time locating and matching PO’s to invoices, resulting in overpayments or even duplicate payments. They knew it was time to re-evaluate their process and come up with a solution. After thorough research, the company decided to implement an electronic document management and workflow system.
So how did this change their accounts payable process and the way they processed and managed documents?
Now with all vital information entered into the content management system, the AP department could easily open the image of the actual invoices, allowing them to instantly review and collaborate electronically.
The best part of the document management system and greatest time-saving feature is the automatic invoice routing. When an invoice comes into the system, the application follows pre-defined routing rules and automatically routes the document to a specific employee’s task box based on the document’s attributes. Then the employee/user can electronically review and approve the information so that it will continue through the workflow process. The application can also be integrated with the accounting system so that as incoming data is pushed through, users can view the document images from either the electronic document management platform or the accounting system itself. With the implementation of the electronic document management system, the AP department now enjoys many benefits:
- They can electronically schedule payment alerts so early-pay discounts can be realized.
- Duplicate payments and over-payments are never made!
- Paper file storage needs are eliminated, resulting in tremendous savings.
- Reports can be run with ease as the information is simple to locate.
- Their information is protected securely and they have a built-in disaster recovery plan.
What about security?
AP also needed a solution for their records management compliance. They must retain the accounting documents for several years and were having challenges tracking the records and their disposition dates of the records in various locations. Some were stored in the buildings and some were stored in outside facilities. This cost money and time trying to locate the documents when audited. Since it was not cost effective to send staff digging thru boxes of paper they were able to solve this problem instantly since the document management platform was a suite of solutions that also included a records management tool. Now the system notifies them when a document is ready to be purged and they no longer worry about lengthy audits that use multiple staff over a course of a week. They can now give the auditor access to the area of information needed and not worry that they are not in compliance.
And the best part of all is that in the end, this accounts payable department realized that they didn’t need extra staff… they just needed a better document management and workflow system.