Especially in a small or mid-sized firm, a positive leader at the helm can help push the firm to its true potential.
8 Benefits of Automating Your Payables
Most accounting firms in the U.S. are small businesses themselves, meaning some of the same processes that can be improved for their clients can also help the firm.
Accounting professionals meet with their small business clients every day, offering advice on how they can be more profitable. Of course, most accounting firms in the U.S. are small businesses themselves, meaning some of the same processes that can be improved for their clients can also help the firm.
One such process that can be greatly improved for almost any business or firm is the tedious and error-prone task of paying bills for services or products. From recurring items such as utility, rent, and phone bills, to invoices from contractors or suppliers, managing paper-based statements is a hassle. Even electronically managing them can lead to oversights.
And when it comes to bills, an oversight means a late payment, likely with a penalty. Processing these bills can also waste a lot of time when it comes to approving them and resolving discrepancies. This inefficient process can also mean the business is missing out on early payment discounts.
How Payables Automation Works
Your firm (and your business clients) receives bills in a variety of formats: postal mail, email, and possibly online or via an app. When you receive a bill from a vendor, you simply scan it or email it to the automation system for approval. Then it is automatically paid by the due date or earlier.
You can also set up certain approval processes, allowing businesses to determine how they want to receive payment: either electronically or by mail. Most payables management systems also allow vendors to electronically submit their invoices into the system, after which the firm would still need to approve the payment.
When used properly, bills are entered into the automated payables management system immediately, preventing lost or misplaced invoices. There are also several other benefits:
- Instant access to electronic copies of all invoicing data for all vendors,
- Reduced need to manually write and mail checks,
- Greatly reduced threat of employee misuse of checking accounts, as well as the potential for theft from mailboxes.
Businesses are automating many of their workflow processes, and the ones that often have the most benefits are those that are the most tedious and prone to errors or penalties. That makes automating your payables (or your clients’ payables) a great place to see real savings.
The Benefits of Automating Your Payables
- Go Even More Paperless
- Smart Scan Technologies Save Time
- Instant Access to Payables, Invoices and Payment Histories
- Approvals and Controls
- Don’t Miss Invoice Discounts
- Integration Options
- Prove Payments and Be Audit-Ready
- Better Security
If you’re like most firms and most American professionals, you’ve moved toward more digital processes and finished work product. Even if you didn’t want to do these things, the transformation offered by cloud technologies is requiring more and more businesses to go digital.
That’s not only good for trees, of course, it’s also good for firm productivity and efficiency. The benefits of reducing paper-based processes in accounting firms have been documented for over a decade, not to mention the space firms were able to save by getting rid of those old file cabinets.
With payables automation, firms extend some of the benefits of a digital workflow to their business partners. Contractors or suppliers simply submit their invoices (preferably in electronic format) and then can get paid electronically, too, and with much less chance of a payment being delayed or missed.
For paper-based bills that inevitably still come in, they can be easily scanned and entered into the payables automation system, then securely discarded (shredded). With highly-accurate optical character recognition technology (OCR), automation systems can quickly determine which vendor an invoice is from, then pull all of the necessary data—including the amount, invoice number, description, due date, and PO numbers. They can also determine if the invoice is a duplicate of one previously entered, thereby preventing double payments.
With payment automation systems, firm management can easily look up:
- when a payment was made,
- how much,
- and which invoice each payment was associated with.
This makes settling potential payment disagreements much simpler. Since payment automation systems are cloud-based, the user also has anytime access to the data—whether at the office, at a client’s, or on the road.
All systems that automate payables include approvals processes that can be set to various levels: allowing lower firm staff to approve some payments, while others might require senior staff approval. These controls are all handled through the secure online system with email reminders notifying staff of pending payment approvals.
The systems also maintain audit trails of which staff members authorized payments, dates, and amounts of all transactions. As cloud-based systems, senior staff can view and approve, annotate, or deny invoice payments even while away from the office. In addition to saving time and giving greater control, these workflow functions help ensure that invoices aren’t lost or misplaced.
Another benefit of automating payables is that the systems can be set up to make sure the small business takes advantage of payment discount terms for early payment. With some vendors or service providers offering up to a few percentage points off the balance of the invoice if the payment is received within 10 or 30 days, organizations with high balances or volumes can save enough to positively impact their cash flow.
Many payables automation systems integrate with cloud-based small business accounting systems. This integration can help eliminate errors and also help the business or accounting firm better leverage their data.
If a vendor or supplier claims you didn’t pay a bill, just look it up. More quickly than looking through a check register, an authorized user can quickly drill down to vendor information, their invoices, and the amounts and dates of payments that have been made. If the payments were made electronically, a trace number can also be obtained that helps demonstrate payment.
Because these systems offer much greater and more detailed reporting capabilities than methods relying on paper-based filing and check writing, they are better at helping prepare for financial audits, providing users with detailed logs of transaction information.
When you send a check to a vendor or service provider, that check can be easily intercepted by someone else, who may manipulate or use some of the information on the check to create more bogus checks. This is a common cause of business identity theft. When a firm or business routinely uses paper checks, they are also susceptible to employee fraud and theft.