Sometimes controllers lose, well, control. They are responsible for cash flow analysis, maintenance of internal controls, regulating compliance and so much more, but when their processes are paper-based it’s difficult to maintain a sense of stability. So when difficulties in financial management arise, how can controllers get back on-track? Paperless automation/document management software does the trick!
Below, we highlight three challenges faced by controllers using paper-based financial processes, and the benefits of solving these challenges with paperless automation.
Cash management: The Institute of Financial Management (IOFM) found that, although AP departments are streamlining and improving their payment processes, 45 percent of controllers still identified a lack of visibility into invoices and other financial information as a top payables challenge. Additionally, 42 percent of controllers said that difficulty handling, managing and finding invoices was their biggest challenge. How can you manage cash when you don’t have the visibility and automation capabilities to analyze financial data? The result is often late payments and fewer opportunities to capture early-payment discounts.
How can document management help? According to IOFM, 41 percent of senior finance executives said that improved visibility into invoices and payables information was the greatest benefit of AP automation/document management. Need more proof? 32 percent of senior finance executives who were surveyed by CFO Research cited better working capital and cash management with paperless automation. It’s easy to see upcoming due-dates, bottlenecks, budget variances, trends, contract/supplier issues, term negotiation opportunities and more.
Operational control: Ardent Partners found that the average organization receives 74 percent of its invoices in paper, email and PDF or fax format. If you’re not using an automated document management solution, then getting invoices in these formats means that information still needs to be manually keyed and documents have to be physically routed, stored and managed. This requires multiple people handling invoices and the risk of losing or misfiling an invoice is much higher.
How can document management help? The survey by CFO Research also found that 39 percent of surveyed senior finance executives cited improved business process execution as one of the most important benefits of automating financial processes. Automating AP makes invoice approval cycles more efficient, streamlines exception resolution, increases accuracy and leads to improved vendor relations. Real-time dashboards provide alerts to users about bottlenecks and invoices that are approaching their due-date so that you can capture more early-payment discounts. Automating reduces overhead, allows staff to reallocate their time and saved money on invoice processing.
Compliance and security processes: Document retention regulations are difficult to figure out, especially if a document management solution isn’t in place. The risks of being noncompliant include penalties and fines, even for unintentional errors. Threats could also occur closer to home in the form of employees who have the opportunity to manipulate financial processes. Manual, paper-based AP processes make it difficult to track invoice history and approvals, safeguard the chain of custody, prevent unauthorized access to data, provide information required for audits and prevent documents from being disposed of. Other risks of a manual environment include the ability to back-date documents, make unauthorized payments and create fake invoice authorizations.
How can document management help? Automation creates well-defined processes with clear roles and regulations in place. This helps enforce consistent business protocols while reducing the risk of variances in processing invoices. Configurable workflows that paperless automation solutions provide allow organizations to adhere to document retention regulations and policies by eliminating the risk of deleting or changing invoices. Are your retention policies different than other businesses? Document management solutions have configurable workflows that can be customized to the unique needs of your organization. Additionally, document management provides an audit trail for activities, so you can see which staff members have been involved in the processing lifecycle through detailed tracking. Role-based security also means that access can be granted or restricted based on the sensitivity of the information. Electronically storing invoices also completely eliminates the chances of lost invoices.
Learn more about managing control of your financial processes in this