In an era where data is the backbone of organizations, digital document management is a critical tool for creating smooth operations, complying with regulations, and making informed decisions.
However, as businesses strive for greater efficiency and adaptability in today’s competitive business landscape, solutions offering more sophisticated automation give organizations the agility to stay ahead.
Accounts payable (AP) software, for instance, is specifically designed to handle the complex workflows and unique challenges of the CFO’s back office–complexities that document management alone isn't intended to address.
In this blog, we’ll take a look at some of the common pains faced by AP departments, and we’ll illustrate how AP automation fills functionality gaps left by document management alone. We'll also explore how consolidating your tech stack by implementing an all-in-one AP automation and document management solution can strengthen your change management strategy and create business agility in the face of a rapidly evolving landscape.
The Limitations of Document Management
Many document management platforms come equipped with features that businesses can leverage in their AP processes. Things like approval workflows can be used for routing invoices from one approver to the next, and web-forms can help businesses collect and submit POs and purchase requests.
These features are a great place to start automating in the finance department–however, document management systems are not designed to offer the complete range of automation that the back office of the modern CFO truly needs to stay ahead of the competition.
Here are some of the limitations you may face when relying solely on document management for your finance automation needs.
Lack of Intelligent Data Validation
In manual AP processes, data validation checks are laborious and time-consuming.
While many document management solutions offer a means of automatically capturing data from digital or printed sources, they alone cannot intelligently validate the accuracy of invoice data, such as matching line items with purchase orders and receiving information.
Doing so manually is error-prone, time-consuming, and susceptible to oversight, which can potentially lead to incorrect payments and financial losses.
Limited Visibility and Reporting
In manual AP processes, your visibility into the status of approvals is highly difficult to track, since communications are dispersed across multiple channels (like emails or papers passed from one desk to the next.)
Document management software offers a better means of tracking your workflows, but it lacks the ability to integrate with your ERP system for seamless GL updates. It also lacks the comprehensive reporting necessary to gain insights into your cash flows and payment patterns.
As a result, your visibility into these metrics suffers without AP automation. This lack of visibility hampers informed decision-making and prevents proactive management of AP processes.
Manual Payment Processing
While document management software can make it much easier for you to securely access and store vendor data, it lacks the ability to remit payments directly.
Without a system in place to automate payments, your team remains responsible for processes like manual invoice validation, check runs, and time-consuming payment coordination with banks and vendors.
All of these tasks pose challenges to managing payment schedules, ensuring accuracy, and maintaining security in the payment process.
Revolutionizing Efficiency with AP Automation
The AP department has seen a significant transformation over the past decade. Research by McKinsey suggests that costs among finance teams have decreased by 29%, while time allocated toward strategic initiatives among AP teams has increased by 19%.
AP automation software is no doubt a key contributor to the trend at large of “doing more with less” in the back office of the CFO, and it is the best way to bridge the functionality gaps left by a standalone document management platform.
Automating processes like 3-way matching, invoice routing, and vendor payments greatly reduces manual transaction-processing activities for your team while improving your rate of accurate and on-time payments.
Some of the business benefits of adding AP automation to your document management solution include:
- Swift identification and resolution of bottlenecks: This shortens processing times and creates smoother collaboration across departments.
- Enhanced decision-making: With greater visibility into cash flow management, businesses can more easily identify cost-saving opportunities, optimize financial strategies, and drive operational excellence.
- Increased rates of on-time and early payments: Automation through the vendor payment process can help ensure your vendors are paid on-time and accurately. This not only strengthens relationships with your suppliers, but also allows you to capitalize on early-payment discounts and rebates,
While document management platforms offer businesses the best means of organizing and securely storing information, they are not designed to serve as an all-in-one solution for your AP team. That's why your business’ best strategy is to supplement your digital record keeping platform with accounting automation software that offers these bottom-line benefits and more.
AP Automation as a Tool for Greater Agility
Integrating AP automation into your document management platform offers several benefits for your team’s efficiency and your business’ bottom line, but it also plays a critical role in your agility–something that is increasingly important given the pace of change in today’s workforce.
Here are some of the ways that a consolidated AP automation solution can support change management in your business.
Improve Forecasting Through Greater Visibility
Comprehensive reporting features in best-in-class AP automation solutions provide valuable insights into cash flows and payment patterns. These help teams make more informed decisions and more accurate projections of future financial commitments.
When your AP automation platform is integrated with your other solutions , you can optimize forecasting accuracy, leading to better financial planning and resource allocation. This increased visibility empowers your finance department to adapt more efficiently to market changes and drive agile decision-making for sustained business growth.
Enhance Digital Resilience
Automated capture and storage of invoices, coupled with AI-powered data extraction, ensure business continuity even during disruptions, like the mass shift to remote work in 2020.
With cloud-based accessibility, remote collaboration, and secure document management, businesses with AP automation are well-equipped to continue processing and submitting on-time invoice payments even when they are presented with unprecedented workforce changes.
Foster Innovation and Differentiation
By implementing AP automation, businesses can allocate more time and resources to strategic initiatives and value-added tasks. Accounting teams can shift their focus from manual data entry and repetitive tasks to analytical insights, process improvements, and vendor relationship management.
By reallocating resources toward these strategic initiatives, AP teams are more readily available to prepare for and adapt to changes like economic downturns or labor shortages: all while your business continues to issue accurate and on-time invoice payments.
Document management remains a pivotal part of business efficiency: After all, a streamlined invoicing process is only as good as the team’s ability to access and securely house that information.
However, the modern CFO’s back office must be bolstered by an AP automation solution that can keep up with the high volume of invoices coming through your back office without increasing your headcount. It must also implement a solution that is scalable and adaptable to change in the rapidly evolving business landscape.
To learn more about adding AP automation to your document management solution, reach out to one of our automation experts to schedule a consultation today!