To err is human, but in accounting it can have serious financial consequences. In fact, when it comes to accounting human errors as small as just one slip of a finger on one entry to throw off the entire bookkeeping process. However, when staff must manually enter details from invoices and other documents - and do so over and over - there will inevitable be mistakes. These range across the entire accounting spectrum, from incorrect tax and purchase order numbers to wrong amounts and even company address that don't match up with the existing system information.
Taken together, these typos will lead to delays as accounts payable teams have to spend extra time in their attempt to confirm the correct details. Even worse, if mistakes do slip through, costly accounts payable fraud becomes a very real threat to the bottom line.
For example, consider a situation where the vendor sends in the same invoice twice but with different invoice numbers. Or a case where a fraudster pretends to be an existing vendor and request to change banking information at the last moment in an attempt to divert outstanding payments to an illegitimate account. In either case there is a snowball effect that impacts the entire business. Indeed, even under the most harmless circumstances, a duplicate invoice that goes undetected will cause an corporate nightmare in terms of money, time, then more of both in order to find the error and reverse the payment in an attempt to retrieve the funds.
Without question, the costs of common accounting human errors add up quickly, from late payments that incur fees to the loss of cashing in on early-pay discounts all the way to false and outright fraudulent payments. As results processes slow down and frustrations increase. The good news? These are all issues that using intelligent purchase-to-pay automation software as a rule can help you avoid.
For those firms not using automated process, the constantly changing professional environment meant a lack of consistent processes. Mistakes became more prevalent during the global pandemic. That’s exactly what finance leaders and AP pros told us when we surveyed more than 1,000 of them in the US and seven European countries this year for the first “State of Automation in Finance” report commissioned by Yooz. We wanted to know what work issues companies large and small across many industries were facing before, during, and after the peak of the pandemic.
It turns out that almost half of all company respondents said COVID-19 had a significant to extreme impact on their ability to process invoices on time. They also ranked the key reasons for late payments:
In fact, for manual process-based businesses, being swamped with a high percent of paper invoices and then not being able to process, validate, and pay them on time in addition to be at risk for fraud? The report found that all three challenges were intertwined.
“More than one-third of finance leaders said time-consuming processes were the biggest problem related to manual accounts payable tasks, with 28% claiming processes are too complex. Issues such as manual validation of invoices, reliance on paper documents that need to be printed and shared across the business for authorization, result not only in delays but also a risk of errors and loss, especially across multi-site organizations.”
In fact, when you drill deeper, you discover that for most companies, reducing errors is a higher priority than preventing fraud. Why is that? Because for many businesses, the risks associated with financial data security and cyber-attacks are often the result of internal human error. And that’s something that can be easily addressed with an automated AP solution that intelligently streamlines and safeguards the workflow from end to end.
So, with the key reasons for late payments in mind, companies are relying on technology and speeding up their digital transformation efforts in order to improve financial control (45%), reduce errors (43%), and reduce expenses (32%). In particular, they are prioritizing automation of their accounts payable function using an intelligent purchase-to-pay platform.
A company that implements purchase-to-pay automation can tackle every single one of the issues cited above in one fell swoop. That’s because a smart software platform handles everything from the moment you place an order to the moment that the vendor gets paid. Software such as Yooz Rising empowers companies to capture, review, approve, pay and export invoices to their enterprise systems with unmatched speed and security. It cuts costs by 80% and reduces cycle time from weeks to a few days or even less. That's definitely addressing the original challenges of processing invoices on time!
In fact, with all of the possible benefits it's surprising that so many small to medium businesses are still relying on manual processes and spreadsheets to handle their invoices. Some of the key ones include:
Indeed, a platform can be up and running without training in an hour, immediately reading incoming documents and expenses regardless of the format in which they are submitted (from paper to fax to email or electronic submissions in any combination). One web interface device reliably does it all, from creating that initial purchase request and generating a purchase order to processing an invoice and paying it on time every time.
Once implemented, the improvements are immediate and obvious. Without fail, the number of exceptions which would otherwise require time-consuming human intervention such as hunting for documents and calling other departments or vendors drops by more than half, from one in four to merely one in ten invoices.
As market researcher Ardent Partners found in its most recent “State of ePayables Report” earlier this year, “top-performing businesses are spending less time hunting down additional information and filling in critical data gaps for invoices. This has a cascading effect on other financial measures, including … reduced exposure to payment risk.” That’s crucial, especially during turbulent times when staff is short, dispersed across remote locations and opportunistic fraud attacks are on the rise.
Tackling digital transformation, one invoice at a time, has another big benefit. When your accounting talent have their hands - and heads - free to focus on the big stuff, job satisfaction goes up. Using intelligent purchase-to-pay automation gives everyone involved more confidence to do what they’re best at, make no mistake.