To keep your business competitive in the midst of a labor shortage it may take more implementation of digital finance technology which enables teams to get more done in less time.
Technology (including finance technology) has a lot to do with why overall worker productivity is noticeably higher than it was 40 years ago, according to Dr. Lee Ohanian, a UCLA economics professor and advisor to the Federal Reserve Banks of Minneapolis and St. Louis.
“One of today’s workers produces the same amount of value as two workers did back in 1982 … That comes from technological advances and innovations (and) new products,” he said during a panel discussion at the 2022 Checkr Forward conference.
And yet manual, high-touch accounts payable (A/P) and accounts receivable (A/R) processes that may have changed only a little since 1982 are holding many companies back. For example, according to the ResourcefulFinancePro report “The State of Automation in Finance: Second Edition”:
- The average A/P department spends 16 hours getting vendor invoices approved each month
- 38% of businesses say their manual A/P process has led to errors in invoices, and
- 31% say suppliers and vendors have been paid late because of things like administrative errors and slow invoice validation.
Streamlining the back office with finance tech
Entering line-item and invoice info into an accounting system can cost both time and money, especially if a mistake gets made. And paper purchase orders and invoices can easily pile up and get misplaced.
Today’s AI-enabled software solutions turn all that paper into digital data that’s searchable and shareable among team members even if they’re working from home – reducing errors and optimizing cash flow.
Also, digitizing A/R can cut the time staff spends collecting and reconciling the remittance data of paper checks, as well as ACH, credit, debit and virtual card, and other types of payments.
Data from “The State of Automation in Finance” shows that organizations that automate paper-based, time-consuming and repetitive tasks with end-to-end invoice data capture, approval and payment save significant time. Almost four out of 10 (39%) businesses report that A/P and A/R automation has removed most manual processes, while 27% say it’s removed at least half of them.
In addition, the increased visibility A/P automation provides into your daily finance processes gives you better control over expense waste, misuse and fraud.
The time saved allows Finance team members to focus on strategic tasks that impact profitability, like improving margins and strengthening relationships with contractors and suppliers, which builds trust and loyalty. It’s a productivity enhancement that can lead to improved morale.
Finance technology and A/R
A/R finance tech solutions on the market make it possible to:
- Easily match invoices, credits and payments with quotes and sales orders to ensure the correct amounts are being processed
- Provide workflows that can be used to define rules and exceptions for A/R processing
- Create customizable approval processes for all types of A/R transactions
- Deliver reports and analytics on the status of invoices, payments, customer credit and transaction history
- Save time on billing and cash recognition and reconciliation via real time connection of all transactions and accounting and information systems to your general ledger
- Automate invoice delivery and remittance collection
- Save time on manually logging in to retrieve remittance data from customer vendor portals, and
- Integrate A/R and A/P transactions with your banking, customer, working capital and fulfillment transactions.
In addition, A/R finance tech provides a valuable compliance assist by collecting and storing the information your team needs for the preparation of regulatory financial reporting.
Although finance technology can help your firm better manage workflows and cash flow, employees may be hesitant to adopt new ways of working. That’s why perhaps the most important step in getting buy-in, and determining which tech solution is best for your company, is getting feedback from your end users about where the cash flow bottlenecks are and what they wish they had to do their jobs better. Any application that’s not suited for your team’s needs would be a wasted investment.
Next step: meet up with IT to collaborate on an audit of the tech you have and identify anything that’s becoming obsolete or is no longer meeting your needs. Are there any potentially untapped software connections available within your tech stack that could save your Finance department time?
Before investing time in a product demo, it’s important to know up-front if it will definitely integrate with your existing accounting software or accounting modules of your ERP.
When you’ve found a platform that checks all the boxes and is the right price, don’t forget to create a change management plan for smoothing the transition and driving adoption to the new software. For some ideas on how to get started, click here.
So increasing productivity doesn’t necessarily mean hiring more people – which is good news since finding qualified Finance people is a challenge right now. Leveraging the support finance tech provides can make A/P and A/R processes more efficient while protecting the bottom line.