Organizations should view the finance function as a strategic enabler and insightful advisor for achieving business goals rather than just a back-office recording and reporting function. For many companies, this requires transforming the finance function. A finance transformation framework brings several key areas together including increased automation, strengthened data and analytic capabilities, and improved controls to support the strategic direction of the business.
One of the key areas of change is automating accounts payable. Better understanding expenses, managing cash flow and simply speeding the input and approval process create a better level of controls across the organization.
Accounts payable (AP) automation greatly reduces manual keying of invoices, reducing errors and administrative costs. Invoices received digitally or via email can automatically be received via a common email address and loaded to the workflow for approval. Paper invoices can be scanned via optical character recognition (OCR) technologies and loaded to the application. Auto application of data allows for better data entry, lower levels of data, if needed and reduction of errors. Storage of the invoices directly in the AP application additionally reduces overall storage and searching costs.
Workflows can be utilized to approve invoices, new vendor set-up and/or issue payments, based on unique dollar and/or risk levels. Automated matching to purchase orders and posting in the Enterprise Resource Planning (ERP)/journal entries can further speed the process. Workflows also allow for greater controls as it requires the organization’s policies to be enforces.
Accountability can be increased as users will know where in the process invoices and approvals lie throughout the month. Scorecards, reports and key performance indicators (KPIs) will show the cost and time related to processing invoices, discounts taken, past dues and other applicable information.
Key features and benefits of automated solutions include:
- Utilize workflow and increase communication
- Reduce AP costs
- Eliminate late fees and incorrectly paid invoices
- Take advantage of supplier discounts for on-time payments
- Manage cash flow
- Automate payments
- Single point of data
- Increase controls
Modernizing accounts payable will allow you a higher level of visibility and control of spending that isn’t achievable via paper based systems. Accounts Payable will create savings opportunities, increase productivity and directly impact the bottom line. This is another way in which the office of the CFO can ensure that finance is aligned to the overall strategy of the organization.