By Magali Michel, Director at Yooz
Imagine a day where Financial Directors and CFOs no longer have to say that “the cobbler’s children often go barefoot” and to finally bring their own actions into line with their discourse!
Financial directors and management controllers play a role in leading everyone in their company towards budgetary rigour, yet their calls to invest wisely, avoid waste and increase productivity have even greater impact when they prove the benefits to the wider business.
Below are five ways FDs, CFOs and accounting departments can quickly and significantly reduce their management costs while keeping things business as usual with accounts payable automation.
- Digitalising your invoices
Data entry, invoice validation, payment, classification – the list goes on.
Processing invoices manually is not only a tedious process, but it is also very costly, with studies showing costs of £8 to £18 per invoice.
The more documents you have, the greater the expense! Storing, archiving and looking up paper documents incur an average cost of £2.50 if you consider direct costs (such as time and storage space) and indirect costs (such as lost documents and delays).
For example, it is estimated that the average cost of finding an incorrectly classified document is about £95.
Digitalising invoices – that is, scanning actual documents and handling their entire processing cycle electronically –leads to substantially lower costs. And, according to CapGemini, costs may be reduced by as much as 70% through the use of automation.
- Automating data entry and accounting processes
Eliminating paper and its inefficiencies is the most visible benefit of invoice digitalisation, but it is not the most important.
The main vector for performance and savings comes from automating tasks and processes. Thanks to artificial intelligence, key information present on invoices can be identified and injected into management tools.
It is then possible to include all the steps in the purchasing process into a single solution, from expressing the initial need up through supplier payment (Purchase-to-Pay), integrating a workflow system and automatic management rules. This enables businesses to reduce the global duration of the invoice processing cycle by a factor of anywhere between 2 to 5 times, as well as reduce the associated costs.
- Reducing delays and disputes
An unhappy supplier is one who has to make a phone call and lodge a complaint.
For the accounting department, it means spending time responding to the supplier and taking care of the problem, not to mention the inconvenience and potential penalties if the issue is serious.
It is estimated that corporate accountants spend 40% of their time handling supplier calls, and 31% handling late payments.
Digitalisation and automation help to drastically reduce the risks of lateness and errors. Not only do they eliminate the downsides of data (re)entry, but integrated control mechanisms can also generate alerts in case of problems, such as when duplicates are detected.
- Managing department activity
With digitalisation, you have access to performance and tracking indicators that would be very hard to obtain with manual processes.
Some of those indicators help managers take action in real-time to even further improve efficiency (outstanding invoices, non-received invoices, late payments etc.), whereas other indicators consolidated on dashboards serve more as a means to measure activity globally.
For example, that includes the processing time and cost for an invoice, average processing time from reception to archive, the number of invoices handled per accountant and even the number of disputes and the average time required to handle them.
Other statistics, such as the Top 10 suppliers, help identify opportunities for optimisation. Thanks to these figures, financial directors can steer their department’s activity in fine detail and take proactive steps in an approach focused on ongoing.
- Using a SaaS solution
Without requiring any compromise on performance, features or security, the Cloud-based Software-as-a-Service (SaaS) model represents considerable savings with respect to on-premise software.
SaaS does not involve any installation or license costs. With per-use payment, invoicing matches the company’s activity.
Not only that, but users benefit automatically – and at no charge – from product improvements and upgrades, such as changes made for regulatory reasons.
Lastly, a modern solution in phase with today’s usage patterns is also fast and easy to learn, bringing accounting staff employees improved productivity starting the very first day.