Streamlining Back Office Functions – Nowhere More Necessary Than In Accounts Payable

By Author: Caroline Wigley
Total Articles: 48
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Businesses are increasingly looking to streamline back office functions. From CEOs to CFOs to department heads across the organisation comes the drive to unlock profit and improve productivity with efficient processing – reducing cost and enabling optimum focus of resources.
Nowhere is this more necessary than in Accounts Payable (AP) where departments are manually processing high volumes of paper.
The organisation has grown. Merger and acquisition have seen the number of departments multiply. There’s been business development and directional change, a growth in spread of centre and office locations, an increase in supplier number.
And what was an appropriate and effective system has become unwieldy, inefficient, and expensive – costing the business in real terms through:
• Steep processing costs resulting from long, manual, multi-touch payment cycles and including outlay for staff time/stationery, printing and postage/storage.
• Late payment penalties and interest – plus the knock-on cost of being late with payment. Losing valued suppliers can have a devastating effect on business, ...
... plus there’s loss of reputation to consider. “We are determined to make Britain a place where late payment is unacceptable,” said Business Minister Matthew Hancock on 20 March as the government announced details of the latest proposals to cut down on the late payment practice. From April 2016 large companies will have to publish their payment practices, to include reports on the proportion of invoices paid beyond agreed terms and late payment interest paid and owed.
• Duplicate payments.
• Staff time wasted tracking down invoices to answer queries.
• Missed early payment discount.
• Lost invoices – AIIM (the Association of Information and Image Management) estimates that it costs an average of $120 to locate a lost invoice, $220 to replace it.
• The creation of an environment vulnerable to fraud.
In addition, there’s loss to the business through:
• The negative effect on supplier relationships.
• Staff focused to tasks creating no value and unable to concentrate on those strategic tasks that would bring tangible benefit to the organisation.
• Management lacking the visibility and control to make the informed decisions required to drive business forward.
In the past the benefits from eliminating paper from the system and automating the invoice management process were to be found only at the large, multinationals and global concerns. But the development of the flexibility and scalability of solutions and the modular structure of software platforms mean that automating Accounts Payable has become a viable – if not essential – choice for mid-tier organisations processing 1,000+ invoices a month.
Paper-based AP processing creates a drain on resources and is costly, hampering progress and reducing profit.
And just some of the benefits of eliminating paper and automating processing in Accounts Payable are outlined below:
• Reduced data entry and processing costs
• Reduced storage costs
• Enhanced visibility and control
• Enhanced query response time
• The duplicate and late payment issues addressed
• Being able to take advantage of early payment discounts
• KPI monitoring
• The AP team focused to strategic tasks.