A new survey of UK financial leaders has confirmed it. Problems are still being caused by the continued reliance on manual processes and not enough emphasis on technology.
One in five (20%) businesses are still using Excel spreadsheets and manual processes for accounts payable. Just 18% have adopted full automation in the accounts payable process - from end-to-end invoice capture, to approval and payment. The issue of manual finance processes has gotten so bad that it’s no longer restricted to the departments and businesses it’s related to.
Supplier and vendor relationships are being put under strain at a time of financial uncertainty, while small businesses are having to deal with late payments while constantly monitoring cash flow. This is a backward step for those that have worked so hard to mitigate the risks associated with a global pandemic.
What issues do manual processes cause?
In the same survey, 35% 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 then shared across the business for authorization, result not only in delays but also a risk of errors, especially across multi-site organizations.
Accounts payable automation is all around us, enabling us to streamline any cumbersome process. So it’s strange to see so many still struggling with this - not just in their role but wider impacts on the business.
Late payments (29%) was also high on the list of issues with manual processes – a problem that can lead to fines, affect credit terms and impact cash flow up and down supply chains. Late payments have long been recognised as potentially devastating to businesses, with hundreds of thousands of businesses at risk of insolvency every year because they lack the reserves of larger organizations to cover delays.
As incoming revenue can account for around 60% of turnover, and businesses large and small currently struggling with cash flow issues, taking too long to pay can again undermine supplier relations as well as their survival.
What are the benefits of financial automation
Replacing manual processes with powerful digital tools allows finance and business leaders to run and optimise a tight ship - decreasing time and costs while improving collaboration and productivity.
With automation, companies can do much more with less. Previously time-consuming and painstaking tasks that may have once required several hours to complete on a daily basis are transformed into one seamless electronic process that takes a matter of seconds.
As accounting and finance documents hold vital insights into the day-to-day running of the business, it’s important businesses are provided with instant, proactive data analysis - something not provided by paper documents or Excel spreadsheets.
The scanning and uploading of documents is as easy as it is taking a selfie and uploading to social media. And, once done, finance departments can start to glean real-time data capabilities and extract valuable information that would have otherwise gone ignored.
In a highly-regulated industry like finance, businesses have to follow compliance to the letter of the law. Safeguarding customer, supplier and sensitive information is a must, and companies must now start digitising documents for secure storage and auditing purposes to protect themselves.
But from the ability to view what’s happening on local sites from home, to being able to immediately identify and rectify issues, the level of business intelligence provided with automation is having a profound effect on visibility and security.
By automating, businesses are also doing their bit for the environment. Rather than wasting paper and money on printing financial documents, real-time data provides everyone responsible to share, store, and electronically sign documents in a matter of seconds.
Finance departments need to step out of the Dark Ages
Although Covid-19 had sped up the rate of digital transformation, it seems that the waves of innovation haven't yet reached the finance department.
Technology investments for the past year have been focused on keeping businesses alive and enabling remote working conditions with project management, video conferencing and collaboration software.
But now we’ve gotten comfortable in our new environments, it’s time to focus on optimising and completely ridding ourselves of inefficient, manual processes.
Equipped with automated tools that help us work together wherever we are in the world, while staying compliant and saving on costs and time, companies will place themselves in a much stronger position to deal with the needs of tomorrow.
It’s time for finance departments to step out of the dark ages, and into the future.