It’s a fact, this is the time of the year when most folk’s nonchalant New Year’s resolutions are broken. Sadly, too many folks give up on their goals far too quickly and slip back into established life patterns, whether health & fitness, financial, or work related. To be certain, we at CloudX are much bigger fans of resolve. Resolve is a more steely-eyed character that winners possess and is what sees them through the tough times into the fruit bearing seasons. With this as a backdrop, we want to help you improve your Accounting Operations to be lean and mean in 2015. And yes, that rhymes, and we like that too!
So many areas for improvement…
Accounts Payable automation is a broad term. That could mean front end invoice processing (ie. OCR to eliminate data entry into Accounting systems), or business rules and digital workflow solutions to mimic manual approval processes, to electronic payment automation (wires, ACH, & virtual payments). Many companies have dabbled in automation of one sort or another, but the most prevalent has to be around invoice archival and document management. Sadly, for many folks, if this isn’t done right it ends up adding to the process without any true dynamic process benefit, but this is tangential. So the question arises…which is the right avenue to pursue?
That is a highly subjective topic because every organization has differing priorities, objectives, and challenges. That being said, it’s a good time to do some introspection and ultimately planning for the future state processes you’d like to see. Part of this has to do with understanding document life cycles in their entirety and clearly defining just how much interfacing with documents drags process and hinders improvement.
If we were to prioritize a few areas as your personal consigliere, we’d say the following:
- For purely financial gains virtual payments (especially virtual MasterCard) are a highly attractive and rapidly deployable option available to AP managers with nil to nominal capital investment. Certainly there are some logistics to work out around getting credit approval in place based upon your spend and vendor on-boarding, but when you work with the right vendors for this type of solution, these considerations are largely mitigated by a holistic approach. With that being said, there are few other initiatives that pack the financial wallop that this does, fully enabling companies to tap into 1-1.25% of their eligible spend in the form of cash rebates. Think of recouping the cost of most AP organizations labor overhead times 5 or 6 (or more) per year! And boom goes the dynamite! This also cuts reliance upon checks which most companies are interested in getting away from for a plethora of reasons.
- From a strictly pain in the neck area, certainly front end invoice processing (OCR to data conversion) is an area ripe with opportunity. Process gains in this area can be as much as 60-70% improvement along with key pickups to visibility within the process. This in and of itself is a novelty to most organizations as it’s something that you strictly can’t experience in the confines of a burdened, manual process. The trick as they say, is in how you get to the improved state. There are dozens of software packages from a deployed perspective that will get you close to the utopian version of an automated paper process, but these tend to be big bucks and require labor resources to deploy, customize, and manage. Newer, document process outsourcing approaches provide low-cost, high impact alternatives that the market is very receptive to and should be considered in your quest for improvement.
- Finally, a lesser known area that’s available for improvement has to do with AR remittance processing. This has been the domain for many banks to dabble, but this can be a costly proposition with limited domain expertise. Certainly banks have a handle on processing checks, but remittances tend to be a bit more complex than the straight forward information that is indexed off of a check. When you start to add complexity to document processing, inconsistent or poor data can become an issue, as either one essentially defeats the purpose of the document automation in the first place. However, in looking at transactional processes to improve, if you can tap into a DPO approach as in the AP scenario above, some really great things can happen and you can offload the burden of these tedious documents at both fractions of the original cost and time.
If you’re not sure what the right approach for you is, by all means continue to check out our information here or feel free to ask us! We’re more than happy to share our insights with you and get you conquering on the shortest path to glory!