A very sad reality of the business world today- most of the businesses are still stuck in the Neolithic period with loads of printed paper invoices scattered throughout departments. Even with the advancement in technology, the finance department is still traditionally processing invoices, which is a pitfall in many accounts payable department. Businesses are still hiring accounts payable professionals to open their business email and extract the data from invoices by manually entering into the system or maintaining files of scanned copies.
This means your system is outdated and you are simultaneously putting your business in an underprivileged position. So it’s the right time for businesses to face it- the antique invoices process wastes valuable time and money.
We can say that “Manual Entry is AP’s worst enemy”!
Below are some of the weaknesses allied with manual invoice processing methods, a description of how such method has been devaluing your accounts payable processing, and why you need to dump them ASAP.
1. It costs extra
According to researchers, on an average it costs about $25 to manually process just single invoice, moreover, in special cases like omission and non-PO invoices, it might cost as much as $50 to manually process. If your business manually processes loads of invoices you can further calculate the cost! Ahh…Manual operations are barely perfect.
2. It’s a time-consumer
With the manual system, to approve an invoice it might take days or even weeks as there are set of authorities in the process to approve an invoice. Your team spends more time to get less substantial work done, which further pays higher operating expenses as you are paying your AP department extra for working more hours.
3. It’s unexciting
Yes, it is! And often irritating. This leads to corporate boredom and incompetence within your team. As nobody wants to sit at the same old desk and enter data for hours, every day, but regrettably, that’s what manual processing all about. This dullness across the department somewhere impacts your business operations.
4. It has a lot of trouble
Invoice processing is often considered as intricate and troublesome process without using any latest tool. When a vendor sends you an invoice on your email id, you need to print it out, enter the data into the ERP or accounting system, excerpt information, confirm details, send it back and out for different workflows like approvals, prepare checks, and do a lot of other convoluted tasks. It is no one’s desire job!
5. Humans are prone to errors
Humans are prone to mistakes, but a single mistype, misspelled in financial numbers can lead to havoc in your business. What if the date of invoice entered is incorrect? What if the paper invoice gets misplaced? Well, it may sound very easygoing but the impact would be reflected in your financial statements. Along with wastage of time, your organization will also bare unusual expenses.
6. Interrupts business growth
When you have an outdated invoice processing system, your employees are usually engaged in performing invoice data entry or other related tasks, they don’t get time to focus on value-adding tasks for business growth. This holds back the development and improvement of the business, making it tough to implement new strategies and attain growth.
7. Tracking manual accounts payable metrics becomes tough
When you are processing invoices manually, tracking accounts payable processing metrics becomes tough. As analyzing numbers may take weeks or months to have an insight of the AP process and detect and resolve blocks.
8. Poor data security
Manual system is prone to security issues like data theft, data loss, etc. When you store invoices in files and keep them in cupboards, anybody can illegitimately use your data as they want. However, data security is important in accounts payable because it plays a crucial role in the financial statements.
How to improve accounts payable process?
It’s naive. The most effective technique to save time and money during the invoice process is to abdicate paper from your AP department and adopt the latest technology. Recently researchers released that around 42% of organizations have adopted tools for processing and around 32% are planning to implement them in future. We won’t leave you wondering what strategies you should adopt to maintain an appropriate workflow.
Here is a list of benefit that your business can reap from the latest technology and streamline the entire AP process:
- With automated tools, you don’t have to fear about manually directing your invoices or entering your data, or dealing with invoices in a proper format. You can easily gather all your invoices at one single platform without any hassle.
- Once your invoices have been digitized, you can automatically validate your invoices and align with your purchase orders. This will enable your AP department to get rid of invoice approval procedures.
- To reduce excess invoices the best way is to start bifurcating your monthly invoices in order to analyze the current invoice field.
- Try to move away from check payments to electronic payments to gain advantages like single-use virtual accounts as well as ACH.
- By using integrated payment process you can easily manage the bulk of payments, by using fewer resources.
- If you want to save time, money and efforts, one of the effective ways is to outsource invoice processing accounting. You can reduce your labor costs up to 60% and focus more on core business competencies.
If you are not upgrading and optimizing your business processes in today’s world, then your system is archaic. Adopting effective tools, improving efficiency, operating paperless, and increasing speed all incorporate the most important goal of any organization: “To excel in this dynamic market”.