Taking the finance department out of the dark and into the digital ages
The DVLA recently announced it is slashing the cost of driving license fees, because it is passing on the savings it’s made from greater efficiencies and lowered running costs. Creating streamlined business processes should be a priority for all business leaders – regardless of the industry sector or size of their business. After all, what company director isn’t focused on the goals of reducing costs, creating efficiencies and increasing their competitiveness?
Optimising business processes leads companies on the right path to achieve these ambitious goals. What we’re currently experiencing is a trend towards businesses looking at how they can streamline back-office processes in particular. According to a recent report by IDC, the top business processes being automated and digitised, both in the last 12 months and over the next 12 months, are heavily back-office oriented. This signals that businesses are starting to wake up to the significant opportunities that lie here to drive competitive advantage and keep costs down.
But of all the back-office processes to automate, businesses need to look at which to prioritise. To my mind, it’s no dilemma. Automating invoice processing is a no brainer for an organisation of any size. After all, this is the process that directly impacts payment cycles and cash flow – sitting right at the core of any business.
In straightforward terms AIP is the automation of the manual tasks of handling, capturing information from, and managing the processing of supplier invoices. Paper invoices are scanned and electronically delivered invoices, such as an email attachment, are loaded into the software solution. The system then extracts the data, validates the information on the invoice, and sorts documents into organised electronic ‘queues’ for next steps, such as approval by the right person in the business. Business process management (BPM) software allows certain rules to be set up in order to implement an efficient approval, payment and query resolution process.
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But effective automated invoice processing doesn’t end there. The fact is, human intervention can often slow down the invoicing process – layers of approvals can lead to invoices being paid late and even lost documents in some instances, which is detrimental to supplier relationships. The answer – AIP technology can actually check if an invoice matches (or very nearly matches) the purchase requisition of works order, to go straight through to the accounting or ERP solution for payment. This means that only invoices from recognised suppliers, with valid information, but with recognisable errors or issues, require clerical or managerial attention.
At the other end of the process, final archiving of the documents in a centralised system helps businesses improve traceability. Not only is this becoming an important consideration in regulated vertical sectors, but across all organisations it means if a supplier phones up to find out the status of their invoice, authorised personnel can quickly and easily find the invoice on the system. Gone are the days of sifting through piles of papers on a desk to locate the whereabouts of said invoice. That concept belongs to a bygone era.
ABBYY recently surveyed existing Accounting and Finance professionals and asked them what benefits they saw from AIP to their businesses. The results confirmed that organisations can address tangible and intangible goals through automation technology – around two thirds of respondents saw both financial benefits (65 per cent) and operational benefits (67 per cent).
When asked what the top operational benefit AIP brings is, it became clear that the technology addresses a number of key benefits across several areas of an organisation. Increased speed of processing (19 per cent), improved accuracy (18 per cent) and reduced burden on management time (19 per cent) all received a similar number of votes.
In financial terms, savings from improved business processes came out on top, with 23 per cent of respondent selecting it as their key financial benefit. In some cases, the introduction of AIP can lead to streamlined personnel in the finance department, with 11 per cent of respondents saying savings from headcount reduction has been the key benefit AIP has delivered to their business. This makes it easy to produce a business case for investors to make savings.
In many countries, finance departments are deploying automation in response to a European directive to control and reduce payment cycle times between companies. It might not be too long before a mandate is introduced in the UK for public sector authorities, following government talks.
We say, compliance or no compliance, it’s clear that the operational and financial business benefits on offer mean AIP should feature on businesses’ IT spend lists for 2015.
It’s time to take the finance department out of the dark and into the digital ages, for the good of businesses everywhere.