Accounts Payable is often viewed as a cost center, and it’s not because AP controls the money leaving your organization. You can’t overlook the cost of doing business (and the cost of doing business inefficiently), either. If your AP department is unable to process vendor payments in a timely manner or mismanages your cash flow due to a lack of communication, it may be time to consider whether a paperless Accounts payable system is right for your business.
With a paperless Accounts Payable system, your organization can improve the quality of all AP functions. If your Accounts Payable process is very manual and your invoice volume is high, going paperless is the best way to get control of your AP department. But how can you be certain that your company is a good candidate for a paperless Accounts Payable system? And how can you justify your investment?
This article explores the topic of compatibility by weighing the benefits of a paperless Accounts Payable system against the risks.
When It Comes to Your Accounts Payable System, Be the Exception, Not the Rule
Accounts Payable is a department mired in tradition. Invoices are received by fax, mail, or email to be keyed into your Enterprise Resource Planning (ERP) system and matched against the corresponding Purchase Order (PO). In a vacuum, this process is relatively straightforward, but more often than not, seemingly small issues arise that derail your AP processors. Duplicate payments, missed early payment discounts, varying units of measure, currency conversions…the list goes on and on.
In a paper-based AP department, your team is responsible for manually identifying and working out these issues to ensure that your bottom line is protected. Don’t be afraid to break from tradition to seize control of your Accounts Payable department. When it comes to your Accounts Payable system, it’s better to be the exception as opposed to the rule. While your competitors spend time manually processing invoices, your team can automate this process from start to finish to boost processing speed and accuracy while also lowering your average cost to file.
Before You Choose a Paperless Solution, Consider This…
Before you select a paperless solution for Accounts Payable, it’s important to take a step back and form a plan for carrying out your due diligence. Allocate a reasonable amount of time to investigating potential solutions. Google is a great place to start as it serves search results according to intent. Be specific with your search queries and there’s a good chance you’ll discover a handful of options from the beginning — but don’t stop there. Research competitors, request demos, and ask for price comparison quotes. There are many types of paperless Accounts Payable systems, and finding the best match for your organization is going to take time. Before you choose a paperless solution, consider the following:
- Is the solution capable of helping your organization achieve its long-term plans?
- Is the solution capable of addressing your requirements or will it require further development?
- Is the solution affordable? (Remember to factor in potential ROI)
- Does the solution integrate with our existing technology and accounting software?
- Can the base solution be reconfigured to assist in other departments or business units?
The Benefits of Going Paperless in Accounts Payable
Let’s take a look at the real-world impact of moving to a paperless Accounts Payable system.
Transparency in Accounts Payable
How do you define transparency in Accounts Payable? Essentially, a transparent Accounts Payable system gives you the tools to monitor the progress of every invoice that enters your organization, giving you direct insight into valuable information, including:
- When an invoice was received
- Which processor received it
- How long it took that processor to move it to the next stage of the AP workflow
- How long it took to process from start to finish
- Whether any special actions must be taken to satisfy the transaction
- Where bottlenecks are forming and why
Invoice Processing Efficiency
Increased efficiency is one of the most highly lauded benefits of a paperless Accounts Payable system. Your organization knows that if it can get faster, it can save money and keep vendors happy, but getting there can be a seemingly insurmountable challenge with a reliable AP solution. With a paperless Accounts Payable system in place, scanning and uploading an invoice for routing is a breeze. Many companies are able to reduce their invoice processing cycle by days or even weeks by simply taking paper out of the equation. Your AP department’s productivity can be further increased by implementing Accounts Payable Automation to eliminate the manual work altogether. Here are some of the ways companies boost invoice processing efficiency by going paperless:
- Search and retrieve invoices electronically from a desktop or mobile device
- Annotate documents before routing to keep the next processor informed
- Guide processors with automated natural language prompts
- No more lost, misfiled, or destroyed documents
- Reduce labor costs
- Eliminate record storage
- Ensure that only permitted processors access certain documents
Superior Audit Controls
Another significant benefit of a paperless Accounts Payable system is superior audit controls. In a recent Forbes Council Post, Katherine Jackson, Vice President of Bayer Properties, explains:
“Signature limits were automated, ensuring every invoice submitted met with company approval guidelines. The system-generated audit trail provided comprehensive information for audit testing. There was never again a problem with lost AP records because someone had misfiled an invoice. The electronic records in the Accounts Payable system pulled over via an API into the accounting software for processing, ensuring there were no keying errors on the data being added to the accounting records. Month-end reporting improved our accrual process to ensure monthly expenses were captured correctly.”
In summary, they were able to establish a system where every document was accounted for at all times, leading to easier compliance with important regulations like SOX and HIPPA.
As your company grows, it will need to continue to bring new employees into the fold to handle increased invoice volume. This can make sustainable growth a big challenge. Calculating how you will scale your company to keep up with business is a real concern for many successful businesses. However, the added efficiency of a paperless system means you can continue to scale your company with only nominal AP-related cost increases — this is doubly true when AP Automation is introduced.
We Can Help You Determine Whether a Paperless Accounts Payable System Is Right For Your Business
Choosing to implement a paperless Accounts Payable system is one way to help your business gain a competitive advantage, but it doesn’t come without some risks. There is an inherent financial risk when making any business-related purchase, and a paperless system isn’t an outlier in this regard. To avoid the potential risks of selecting the wrong solution, talk to an expert that can help you determine whether a paperless Accounts Payable system is right for your business. Take this knowledge and apply it to other solutions. Ask all the questions you need to settle on a shortlist and be transparent with your selected vendors to ensure that your solution can address the problems you set out to solve in the first place.