Has your business considered automating its Accounts Payable processes?
February 29, 2016
Many businesses recognise the need to improve the process of accounts payable. Typically this is a slow, boring, mundane data entry process - driven by paper.
Businesses generally think that there’s nothing more to the AP process than some manual data entry, therefore improving it would mean nothing more than putting in some document capture tools or electronic data interchange.
Automating accounts payable however, should begin with an efficient manual process. Why? because if you automate a poorly designed paper process, then you essentially just make things exponentially worse.
How often does your business review these systems or processes?
The accounts payable department is an expensive one, generally consisting of multiple workers entering data in accounting systems, noting invoices, sending emails, creating spreadsheets, matching purchase orders, reconciling statements and so on - whilst also managing phone calls from determined vendors. If you want to streamline the AP system to increase productivity, you first need to understand what you want your outcome to look like & why.
To map out the transformation, it can be helpful to begin by measuring the current state of play. Understanding how you receive invoices, raise purchase orders, archive processed documents and also manually enter the data into your finance system should be the baseline research to get started.
If you are a business owner, you more than likely know how this process works already - at least you think you will. It is important to get feedback from those involved in the actual processes, many employees value their role in your business and will seldom kick up a fuss about any steps in a process that they believe could be improved. It is recommended that you ask them openly and tell them you're reviewing the process and would love some feedback or suggestions around the current systems that are in place and issues they encounter.
Straight off the bat, it's a common theme for business owners to immediately think that seeking automated or improvement options in this space will be very costly - but how much are the processes already costing the business?
These costs should not be measured in the weekly labour costs either, the knock on effect of a poorly designed/operated AP area can be astronomical, yet generally they are just perceived as part of the day to day cost of doing business.
The truth is that without understanding the current processes intimately then it can be extremely difficult to make a calculated assumption of what the true current cost to the business is.
The other common misconception, particularly in smaller businesses is that “the machines are taking over” - I can't stress enough, that this is not the case. Yes, software and hardware can now do 90% of what was previously done by humans, but that doesn't mean that those staff need to be marched out the door. In regional areas and SMB’s of less than 30 seats, many management staff are required to wear multiple hats, i.e the business manager may also manage HR & the business owner may also manage accounts payable with some assistance.
Efficiency is the key & I have not yet met anyone who is alive who wishes they had more time on their hands - the work environment is no different.
In this day and age business owners are looking at new and innovative ways to become more efficient, capture growth opportunities & ensure that they remain agile to market conditions - in understanding how your current processes truly work and if their are any existing deficiencies this will assist you in future business planning.
If business process optimisation or task automation isn't on your radar, then it could be a good time to give it some consideration. Accounts payable processing is great place to start for any business as it is a multi faceted business procedure & also extremely critical.
There are multiple ways that your business can go through the review process and it is typically recommended that you engage early with someone who carries expertise in business process mapping & improvement.
There are many quick wins to be had for businesses in this space, with many businesses already enjoying the freedom that a software assisted AP process allows.
Start now, start small and start your digital transition sooner rather than later.