As a finance and accounting professional, there is always a steady stream of work to be done. You’ll likely have a long list of tasks to complete at the end of each month. That's why you should Automate accounts payable
A single data entry error or missed payment deadline can have serious consequences to the business. This could lead to unhappy customers, suppliers and employees.
For some businesses, most of their accounting processes are still manual. Manual accounting systems are not only inefficient and time-consuming, but they are also prone to errors and can even add costs to the business.
Many companies are implementing automated processes to reduce mistakes and save time and money. According to a report by the Association of Chartered Certified Accountants, 55% of finance executives and professionals expect the development of automated accounting systems to have the greatest impact over the next 3 to 10 years.
In this post, we will highlight the main challenges with manual accounting and the key processes that need to be automated so you can operate more efficiently.
Challenges of manual processes
Are you missing payment deadlines? Are there data entry mistakes on bills and invoices? Are you and your team regularly doing overtime just to meet month-end accounting requirements? Is there a risk to process the same document more than once?
If you’re nodding your head to some or all of these questions – then it’s time to review your accounting operations. If you’re still using manual processes, there are a number of challenges you need to be aware of that can be costing you valuable time and money.
1. Time consuming and inefficient
Manual accounting processes use paper documents and ledgers that take time to sort through, record and process through the system. Manual filing systems enable limited number of sorting indexes, and can also result in lost or misplaced invoices or receipts. And because each document takes longer to process, your accounting team becomes more stressed and overworked, resulting in unhappy employees and below standard performance.
2. Prone to errors
Let’s face it – people make mistakes. Errors can be misspelled names, incorrect account numbers, jumbled numbers or financial figures, and wrong dates or pricing information. In a manual system, it can take a lot longer to track and correct these common mistakes. A wrongly filed document is very hard to locate.
3. Lack of visibility and control
Accounting involves a lot of documents, from bills and invoices to bank statements and other financial information. This can be quite overwhelming and difficult to track if you have manual processes. For instance, monitoring and reporting payments can be difficult. It would require constant manual tracking, from data entry and processing to updating and reconciling of the actual payments.
4. Manual invoice approval process
Invoices and bills require verification by department, project or team expenditure approvers. Manual or “electronic” email approval process is very inefficient. It is finance’s responsibility to pay an invoice or bill on time and ensure business continuity. But, if the document is misplaced or still on approvers desk, it will take time and effort to trace back a mistake. Manual control of simple or complex document approval workflow is extremely difficult and a human resource hungry process.
5. Lack of security
Security is one of the biggest challenges with manual accounting. Since you’re dealing with paper documents, it would be very difficult to track and monitor sensitive business and customer information.
Documents can be lost, stolen, copied or altered without anyone knowing. A data privacy or security breach can have serious consequences to your company – from loss of customers and damaged business reputation to financial losses and legal or compliance issues.
Where to start – key processes to automate
As you can see, there are a number of challenges with manual processes. To keep up with the demands of the business, your accounting operations need to be more efficient, accurate, secure and can provide more visibility and control.
This is why automating your processes make a lot of sense. But where do you start? Migrating from manual to automated accounting can be difficult, costly and overwhelming. Not to worry. We have put together some suggested areas to start with:
Accounts Payable (AP)
We suggest you start your journey by focusing on your accounts payable function. By automating your manual AP workflows, the process becomes a lot simpler, more efficient and more manageable. Depending on the size of your company, AP automation can reduce the total time it takes to process an invoice by 60 to 70 percent.
By automating your accounts payable function, you can:
- Centralise all data for easy access and storage
- Reduce invoice processing time and labour costs
- Implement simple and easy-to-use processes and workflows
- Minimise data entry errors and double handling
- Gain visibility and enhance security at each stage of the AP process
An audit can be a long and drawn out process when you’re using a manual accounting system. Even just locating specific documents would take time since you must sort through paper-based document folders and filing cabinets. With an automated system, you have all the information in front of you, with real-time access to relevant documents.
Automating your audit documentation also improves data security. Since all the information is digitally stored in a central location, it would be easy for you to track and monitor access to sensitive and highly confidential business data. You can prepare audit documents and send them in a predefined view, so your auditor can work from their office without need to access your ERP system.
Depending on the size of the company, procurement can be a complex process – managing suppliers, working with quotes and purchase orders, handling invoices, order tracking and regular reporting. So, there are a lot of paperwork to go through, manage and organise.
Automating the procurement process therefore starts with digitally organising and centralising all documents for easy access and storage. This would eliminate the paperwork and streamline procurement workflows – resulting in better supplier relationships and hassle-free ordering of goods and services.
How much time do you spend on your monthly reporting? With a manual accounting system, the process takes a lot of time since you have to make sure all the information is entered accurately. But because you’re working with specific deadlines, it can be difficult to balance speed with accuracy.
Automated accounting processes could change all that. You can significantly reduce the time you spend entering paper documents and checking the accuracy of the information as everything is automatically recognised, verified and digitally stored in the system. This allows you to easily double check the data and correct any mistakes or errors, which delivers a faster, more efficient and more accurate month-end process.
To start organising your financial and accounting information in one central location – consider implementing an Enterprise Content Management (ECM) solution. ECM digitally and securely stores all sensitive business data with easy access to the information anytime, anywhere.
A new ECM will change how people work and affect the way documents are managed right across your organisation. It's not an easy or quick decision to make, but our Enterprise Content Management Checklist will help you consider your options and identify the right ECM to meet your business needs.