In his outstanding book “Automate This”, author Christopher Steiner tells the story to Thomas Petterfy, a virtual unknown who single-handedly revolutionised the stock trading industry and became one of the richest men on the planet in the process. Petterfy was not a trader, nor did he have a degree or experience in finance. Rather, he was a computer programmer with a visionary sense for identifying inefficiencies and developing ways to solve them.
Petterfty developed an automated system for share trading so accurate and efficient that within a decade it had completely redefined the stock market. Pits filled with screaming traders and frazzled chalkies, desperately trying to make sense of the utter chaos below them swiftly became relics of the past. Today, the only sound heard on trading floors is the hum of processors churning data feeds in one end and spitting automated bids out the other.
Automation touches virtually every area of our lives, making them simpler, faster and more efficient. Today, you can do all your banking, shopping and order a ride from A-to-B in minutes, all through your phone. It is a wonder then that so many businesses rely on inefficient, outdated processes when it comes to managing their day to day operations. With so much at stake in a fast-moving global economy, automating critical functions such as Accounts Payable should be a no-brainer. Nevertheless, some companies are missing this opportunity, and this is costing them real money off their bottom line due to lost revenue and productivity.
In this post, we will look at some of the common problems that many business face and how automating your AP system can solve them.
Problem 1: Costly Human Errors
No matter how experienced or efficient, humans are not infallible and will make errors. The more manual your processes, the more room there is for mistakes to creep in. When it comes to accounts payable, this can cost your business dearly. Every time an invoice is submitted incorrectly, or not submitted at all, your staff are spending valuable work time identifying the cause of the issue and trying to correct it. Every phone call, every email and every discussion is consuming the resources of multiple employees that could otherwise have been directed towards productive purposes. While the exact cost of all this lost productivity might never be known with 100% accuracy, eliminating these wasteful occurrences will, without a doubt, deliver significant gains.
Problem 2: Human Resources
As all executives know, it is your people that make your business what it is. By the same token, payroll is, for most organisations, the single largest expense. It is, therefore, part and parcel of effective management to get the most out of the men and women that work hard to achieve success. With that in mind, it is astonishing that so many businesses still have employees devoting time to manually keying in invoices, correcting errors and exceptions, responding to vendors, following up on payments and a myriad of other processes that could be performed so much more efficiently or eliminated with technology. The larger the company, the greater amount of time can disappear into the manual AP vortex.
Freed from the burden of having to perform these more mundane tasks, your accounting personnel will be able to focus on what really matters: making your company run as smoothly as possible. Many companies baulk at the cost of automating. However, as your company grows and the workload mounts, you will have little choice but to hire more staff. The cost of automation needs to be weighed against the price of leaving things as they are with manual processes.
Problem 3: Lack of Optimised Payment Schedule
Many of your vendors likely offer you a discount for paying early or apply penalties for late payments. If your AP department is not paying on time, then you are missing out on these breaks and/or paying more than you need to. While the savings or additional payment on any single invoice might seem like a trivial amount, over time this can aggregate to significant figures that you are otherwise leaving on the table. The larger your business and the more suppliers you have, the greater the opportunity cost of not optimising your payment schedule. Of course, every vendor has different terms and varying arrangements for early payment. Manually keeping track of all these can be quite the task whose cost outweighs the benefits. This may be precisely why many companies don’t do so. Finding a way to work payment terms to your advantage simply makes good business sense.
Problem 4: Tension in the Workplace
Managing office politics and tensions can be a trying task that unnecessarily drains resources. As with any other problem in the workplace, nobody wants to be held responsible for a crisis. So, when a disgruntled vendor calls upset over an unpaid invoice, you can almost set your watch to the sound of your Purchasing and Accounts Payable Departments blaming each other for any oversight. Aside from the time wasted in claims and counterclaims, you need these two crucial cogs working well together. After all, everyone is on the same side. It follows then that reducing human error across the board will remove one potential source of considerable friction, and that is good for everyone.
Problem 5: Lack of Visibility
In today’s hyper-connected world, we are all used to having unprecedented amounts of information constantly at our fingertips. Your sales team probably have their CRM; your project managers might be employing team collaboration tools such as Slack to keep everyone on the same page. Why are your AP staff not doing the same? Enhanced visibility has numerous benefits. Firstly, the added checks and balances will ensure that fewer payments will fall through the cracks. Managers will have greater insight into the state-of-play at all times, while other team members will also have access to information that will help them do their jobs more efficiently. Of equal importance, while nobody likes to think that fraudulent behaviour is occurring in their organisation, it is an unfortunate fact that no workplace is immune to such abuses. A lack of visibility is the perfect smokescreen for any unscrupulous individual who wishes to take advantage of the system, whether internally or externally.
Problem 6: Lack of Timely Information
Modern business moves at a breakneck pace and efficient managers need to be able to make critical decisions quickly and accurately. The easy availability of up-to-date information and data is critical to ensuring that this can happen.
Without automated systems, generating reports or collating required information can be time-consuming and subject to inaccuracies and errors. These can slow the decision-making process down, or worse, lead to poor decisions based on inaccurate information. Your AP status tangibly impacts your cash-flow situation. It is a given that cash flow will be front and centre when it comes to a significant percentage of financial and strategic decisions that you will make every day. Without immediate access to real-time information, you place yourself at a distinct disadvantage.
Accounts Payable Automation – Solving Your Business’ Problems
It should be clear how much potential value and efficiency can be unlocked for your organisation if you are still keying invoices in manually. Each of the problems mentioned above can be drastically reduced or altogether eliminated with a system that automates your processes efficiently and simply.
Xtracta offers a unique approach that can deliver real efficiencies for your organisation. With Xtracta, you can extract required data directly from scanned, photographed or digital documents, including emails and have it sent directly into your accounting or ERP software. Our technology is powered by artificial intelligence, allowing it to learn from experience to pick-up precisely the information you require from even semi-structured documents. Simply put, you tell Xtracta what data you want and the engine will get it for you from virtually any document. It’s set and forget!
Contact us today to find out how Xtracta can help you gain efficiencies and avoid unnecessary costs.