Reasons to Go Paperless in Finance
Finance has moved on leaps and bounds since the days of the paper ledger. With finance systems, such as Sage X3, providing multi-ledger accounting, automatic currency conversions, sophisticated dimensional analysis, and many other features.
However, there are some processes which don't seem to have progressed to the same extent and still rely on print outs, in-trays, and manual interventions. One area of note is the accounts payable, or AP (supplier invoice) process.
In many businesses today the AP process still relies on printed paper invoices being signed (thankfully the vast majority of invoices now arrive by email rather than post). Invoices need to be signed for authorisation and annotated with GL codes before being manually rekeyed into an accounting system. This process is not only tedious but also subject to error, costly (time and money), environmentally wasteful, and lacking in auditability. We will explore the impact of manual, paper-based processes in this article and look to understand the reasons why moving to an electronic system is so advantageous.
Studies have shown that, at any given time, around 25% of finance professionals are looking for a new job. This is likely as a direct result of not being able to do the job that they were employed to do due to onerous paperwork and repetitive manual tasks. Key knowledge workers in business should be performing planning and analysis not data entry, and this dissonance between job role and the work required causes a significant degree of dissatisfaction. The cost to a business of consistently recruiting, training, and onboarding team members is significant. And could be largely avoidable through improved retention as a result of automated systems and reduction in repetitive tasks.
The True Cost of Manual Data Entry
Approximately 20% of AP invoices entered manually into accounting systems require some form of correction as a result of erroneous data entry. This not only wastes the time on the employee correcting the invoice, but may trigger repeated authorisation, cause delays in payments (losing early settlement discounts or compromising supplier relationships), or risk incorrect payments to suppliers. All of these can be streamlined and avoided in an automated paperless system.
Statistics and information on the true cost to process an invoice vary drastically as there is an array of different variables. But in a more sophisticated B2B environment it is not uncommon to require between 5 and 10 minutes to manually enter an invoice into an accounting system. This includes manually entering, checking values, validating Purchase Orders and GRNs, confirming and recording authorisation, and completing GL coding. This doesn't even take into account the time it takes to authorise the invoice or any lost time sat in someone's in-tray and subsequent time spent chasing. Delays in processing may compromise the ability for a business to access early settlement discounts, and may even result in declining supplier relationships if payments are frequently missed. If we combine the clear hard costs of time spent (and in this case, we are assuming it is not the Finance Director or Financial Controller performing these tasks) as well as the lost savings there is a significant business case for looking at paperless automated processes.
Beyond the financial cost saving and complex element of employee satisfaction there is also a Corporate Social Responsibility element to going paperless. The expanding concern around the world for the environment makes it ever more important to have that ‘green’ edge. Put simply, printing and shredding paper unnecessarily is environmentally wasteful. It should not be accepted as a general practice merely because 'it has always been done like this'. In fact, by reducing waste and use of resources could mean that partners, suppliers, and consumers look more favourably upon that business.
Why Choose Electronic
Manual systems are universally considered as weaker than electronic systems when viewed through the lens of control and audit. A workflow driven electronic system automatically records each intervention, delay, and change of ownership - all of which are lost when a bit of paper floats around an office. Notifications and email alerts that are triggered through an electronic workflow help expedite the process and all activity can be audited to review process and efficiency improvements in addition to financial investigations.
Finally, the office of finance is a knowledge centre staffed by qualified professionals who do not require access to physical infrastructure (as would be common in a factory). The finance office is well suited to remote working as long as the correct tools are in place to enable this. Where businesses can remove operational bottlenecks, such as paper-based Purchase Invoice processes, they are facilitating their businesses to operate in a far more agile way. The evidence of this is clear over the course of 2020 through the global COVID-19 pandemic. Businesses capable of rapidly realigning to remote working in all areas were able to continue working throughout ensuring staff and public welfare, while delivering their services to customers.
The office of finance is an ideal place to be removing unnecessary paperwork from the business. Using solutions such as X3CloudDocs can help organisations improve efficiency, cut costs, and make a positive impact on both their workforce and the environment.
Find Out More:
- How does X3CloudDocs work?
- More details on why your employees are your most valuable asset in the age of automation
- Calculating your return on investment on automation software