Your Essential Guide To Implementing Paperless Accounts Payable
You’ve probably heard or read about all the benefits of having a paperless accounts payable system. But there’s so much paper in AP right now that going paperless can seem like an impossible goal. Paper invoices, paper approvals, paper records, paper checks – it just goes on and on.
Creating a paperless accounts payable process is always a challenge. But going paperless in the accounts payable department has advantages across the board (which you can read about below) and it saves your company time, storage space, and money. The closer you can get to a completely paperless process, the better it is for your company.
However, it’s not always practical to try making your accounts payable process paperless all at once. Often, you’ll find that it’s better to take gradual steps toward reducing the amount of paper used in accounts payable. You might even discover that a completely paperless office isn’t realistic for your company. That’s okay. Even switching to a partly paperless system will help. An example of a partly paperless system is when you automate accounts payable processing but still accept paper invoices and send payments with paper checks.
Once you’re convinced heading toward a paperless accounts payable process will help your company, one of the first steps is digitizing your accounts payable process. You’ll need to take stock of your current process, figure out your paperless goals, get everyone who’s involved on-board with automation, and finally begin implementing your vision for a paperless accounts payable department. Keep reading to learn more about exactly how that can happen in your company.
A 2015 survey by APQC shows “bottom performers” are spending an average of $12.44 to process each invoice. Top performers, on the other hand, spend an average of $4.98. The big difference lies in labor costs and how much manual attention the invoice needs. More time spent handling paper means more money spent processing each invoice. But when you digitize invoices and use an automated, paperless accounts payable process you save money.
Storing paper records can get pretty expensive. If you’re storing records on-site, then you’re losing space you could use for something else. Plus you’re paying to maintain that space. But if you choose off-site storage, those charges can add up as well. Not only is there a fee per month, but you’ll also have to deal with transportation costs, miscellaneous fees, and an additional charge if you want documents destroyed. Digital document storage providers also charge a per-month fee, but it’s much easier to use and there are no hidden fees for transportation, accessibility, and things like that.
If you’re storing paper records on-site and have a fantastic filing system, then accessing a specific file won’t be too hard. But most companies store at least part of their records off-site or have so many files that it’s hard to find what you’re looking for. And on top of that, if you’re not sure exactly which file you need, digging through all your past records is a nightmare. Wouldn’t it be easier to find information using a search engine that’s built into your digital document storage system?
Lost and Stolen Files
Accounts payable departments deal with so much paper that it’s easy to lose invoices in the shuffle. Misplaced or lost invoices can lead to unpaid orders, late fees, and issues with audits. On top of that, the accounts payable department handles so much financial information that they’re a target for fraud and theft. With a paper system, it’s easy to steal files and hard to notice that they’re gone. It’s also more difficult to enforce controls designed to prevent fraud.
In a paper-based system, every step of invoice processing is handled manually. This often results in delays and missed payment deadlines as employees struggle to keep up with incoming invoices. If someone’s out of the office, the entire system can grind to a halt waiting for the employee who’s responsible for initiating invoice processing or for issuing payment approvals. In an automated system, anyone in the accounts payable department can initialize invoice processing. Also, managers can issue approvals remotely so there are fewer delays.
Paperless accounts payable software lets your accounts payable department track invoices and easily access information anytime during or after the approval process. At any given moment, real-time information for every single invoice in the system is right at your fingertips. There’s really no good way to do something similar with a paper-based system.
Another big reason for businesses to go paperless is the positive environmental impact. The process for making paper includes cutting down trees and putting carbon dioxide into the atmosphere. Plus, a good percentage of the paper we use in accounts payable processing just ends up in the trash. In contrast, paperless AP processing is “green.”
First Steps To Paperless Accounts Payable
Take Stock of AP and Start Planning
Before you can implement a paperless accounts payable solution you’ll need to get an idea of where your accounts payable process stands. Take the time to examine your current workflow. If you don’t already know, find out how long it takes to process an invoice on average and how much it costs your company per invoice.
There are also 5 questions you should ask before moving forward with accounts payable automation. Sit down with the AP managers, CFO, and others involved in the decision and talk these issues over. You need to come to an agreement about your goals for automation and find out who’s on board. Then you’ll need to work together to figure out how AP employees will use the extra time, how much money you’ll save with automation, and how much it will cost. You’ll also want to discuss what type of accounts payable automation system you’ll use.
Get Everyone On Board
Often, the biggest obstacle to implementing a paperless accounts payable system is the people you’re working with. Change doesn’t always sit well with people and resistance can come from within the accounts payable department, upper management, or IT. In each case, you’ll need to address their concerns before moving forward.
Within accounts payable, people will want to know how this will change their jobs and whether or not it will lead to layoffs. Management will want proof that overhauling the accounting department will be cost-effective and also improve business processes. IT will need to know how implementing a new AP system will affect resources, compatibility, and security. It’s important to understand everyone’s concerns and explain why automating accounts payable will be good for all the departments involved and the company as a whole.
Make Choices About Paper
As you clarify where your accounts payable process stands and who’s on board with automating, you’ll also want to consider how much automation will be practical for your company. Getting rid of paper entirely is almost impossible, but you’ll need to decide how close you want to come. Perhaps you still want to keep paper files of incoming invoices but process the invoices electronically. Or maybe you’ll store all the AP information digitally but still make payments on paper checks.
This decision depends on your company’s needs and to what extent everyone is on board with re-engineering the processes in your accounts payable department. If everyone’s committed to completely overhauling AP, that’s great. But if not then digital image capture and/or indexing is a good place to start implementing a system that uses less paper.
Figure Out Digital Conversion
The 2014 “AP Automation Survey” by The Institute of Financial Operations found that over 50% of invoices still arrived on paper for 70% of their respondents. And some of those respondents still had over 90% of their invoices arriving in paper form. You can’t always control whether or not invoices arrive on paper. But you can control how you handle them once they arrive in your accounts payable department. With so many invoices arriving on paper, you’ll need a good way to convert them into an electronic format before you automate your invoice processing.
Make sure the system you choose to convert paper documents to a digital format includes Optical Character Recognition (ORC). This process creates searchable, editable digital copies of your paper records. With NextProcess, you can digitize the invoices in-house or outsource document scanning to our Document Imaging Services. Either way, our data capture technology ensures over 99% accuracy.
We also have the advantage of offering data indexing. This goes a step beyond ORC by creating a searchable index for virtually every aspect of the document. That includes all the information in the document (text, barcodes, etc.) as well as metadata with respect to the document submission (date received, user who submitted, etc.). That lets you search for the information contained in each document as well as information about the document and how it has been processed. This makes data storage easier and enables the highest quality automation.
Moving On To Automated Workflow
Choose An Automation Supplier
It’s crucial that you select a good supplier for your accounts payable automation software. There are several questions to ask when you’re searching for software supplier. You’ll want to find out how quickly they can implement the system, whether or not it will work with your existing ERPs, and how much it’ll cost. You’ll also want to ask about how the reporting tools work, how easy it is to expand, and whether or not they offer a free trial of their software.
A good software provider can make or break your implementation. It’s pretty standard in the enterprise IT/Software industry for 2/3 of implementations to either fail entirely or get scaled back. In contrast, NextProcess has a near perfect implementation rate. We can deliver this high degree of reliability because we never lie about functions, features or pricing. Plus, we’ll stick with you for the first few months to make sure the system you’ve purchased is working perfectly.
Set Up Custom Tolerances
Under an automated system, you’ll set up custom tolerances for automatic invoice processing. A good AP Automation Software system can automatically code incoming invoices and route them for electronic approval while still giving you complete control over the process.
With NextProcess’ accounts payable software, you’re able to access every detail of your invoice processing and create custom tolerances for electronic approval. And this isn’t just a one-time process. You’ll be able to keep adapting your settings to make sure they work just right for your business. Tweaking functionality is one of the things we’ll be helping you with through the first six months after you first start using our AP automation software.
Learn The New System
Software systems like the one we offer are pretty easy to use. Over the first few weeks of implementation, accounts payable employees will learn the new system and make sure everything is working like you need it to. And we’ll be there to answer any questions and fix problems that might come up.
The longer you use NextProcess’ accounts payable system, the more efficient it becomes. Once you get the new system in place, it wi’ll processes most invoices quickly and efficiently with no trouble. As you continue to customize the software it’s not uncommon to get to the point where it’s processing 80 to 90 percent of your invoices automatically. And the invoices that don’t fit your tolerances or need manual approval will go straight to the appropriate manager.
See A Free Demo
Want to learn more? Have questions that weren’t answered in this article? Get in touch with us. We’ll be happy to answer your questions and set up a free demonstration. That’ll give you a chance to see exactly how our paperless accounts payable software works with no-strings-attached. If you like what you see, then we can get started setting up accounts payable automation for your company.