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Why Your Accounting Team is Stuck in the World of Number Crunching

Cash Flow OptimizationCFO Strategy

number crunching

Among all the resources accounting teams possess, time is the most valuable.

Accounts payable is the most arduous, cumbersome, and time-consuming process in finance today. The status quo for vendor payments among accounts payable teams today looks something like this:

  1. Manually keying invoice data into accounting system
  2. Chasing down signatures
  3. Printing paper checks
  4. Tracking and calculating applicable discounts on spreadsheets
  5. Gaining elusive approvals from traveling CFOs
  6. Stuffing envelopes and mailing payments
  7. Filing away paper records

In total, this process takes weeks to complete, and also can cost as much as $25 per invoice. With businesses processing an average of 100 invoices every month, this cost of time and money can quietly reach extravagant levels without CFOs even realizing it. As businesses grow and add vendors, the percentage of time accounts payable teams spend performing the repetitive and manual tasks associated with “paying the bills” continues to approach 100%.

WHITEPAPER DOWNLOAD – Strategic Advantages of AP Automation

Of course, the more time accounts payable teams spend on simply getting vendors paid, the less time they have to focus on paying those vendors in a way that is advantageous to the business. Opportunities like improved short-term cash flow, revenue from cash rebates and early pay discounts, and improved defense against fraud are foregone by default because paying the bills on time to keep the business running is enough of a challenge.

Disruptive technology has eliminated the need for accounts payable to be this large of a burden on businesses. And yet, the vendor payment process at most businesses remains an enormous source of frustration and cost.

CFO’s are looking at a huge opportunity to save their company valuable time by lifting their accounting teams out of their roles as “number crunchers” and enabling them to take the more strategic approach to vendor payments that modern technology affords. So why haven’t they?

Here are three reasons that attempts to do this have come up short thus far:

Adding headcount is not scalable

If an accounts payable team in a growing midsized company is overwhelmed by the growing volume of invoices, adding another team member seems like a logical solution to the problem. And it will be – until the volume of invoices grows beyond the capacity of the resized the team. Then what do you do? Add another annual salary plus benefits devoted solely to getting the bills paid?

Adding a full-time employee is a huge investment for a growing business, and adding multiple employees for the sole purpose of keeping up with vendor payments becomes very impractical for any business. While hiring can quickly ease the burden of volume, it will only be temporary. And continuing down the path of adding headcount will inevitably lead to a dead end for every CFO.   

Point solutions provide limited returns

The accounts payable process is broader than the individual acts of recording invoice data and sending a payment. Investing in solutions that only tackle these individual components of vendor payments will provide limited returns, and leave opportunity for further payment optimization on the table.

Optical Character Recognition Solutions

A popular investment choice among businesses to streamline AP has been Optical Character Recognition (OCR) technology. While this technology, saves some effort by scanning invoice data into your accounting system, plenty of manual work is still necessary. With the accuracy of OCR tech advertised to be 90%, and hundreds of invoices processed each month, this adds up to a very large amount of inaccuracy that requires reconciliations at the end of a quarter.

Payment-Only Solutions

Another popular choice is electronic payment solutions. While it’s true that electronic payments are a less expensive payment method than paper checks, payment-only solutions still leave plenty of opportunity for improved processes unaddressed. While these solution are typically appended to your existing workflow, and don’t integrate directly into it, your AP teams may still favor paying by check as it remains the most familiar and routine.  

Settlement accounts add to the complexity

Payment solutions in the market today offer to make payments on behalf of the companies that they work with. While off-loading the burden of setting up and executing the payment to another party is a surefire way to streamline payments, it’s possible that it can add complexity to bookkeeping in the aftermath of those payments.

Many solutions utilize settlement accounts in the process of placing payments on behalf of their customers, requiring the payment to move into their own bank accounts before they can be executed. The usage of settlement accounts inevitably removes transparency and adds guesswork to the process of performing daily reconciliation, as you can no longer regard your business’s bank account as the source of truth for bookkeeping.

This added inconvenience offsets the convenience gained by having the payment made on your behalf, and ultimately leaves you with another convoluted process.

How to Effectively Invest in Accounts Payable

Earning a worthwhile return on your investment in accounts payable requires a holistic approach to the end-to-end vendor payment process, starting with the time an invoice is received and ending with the successful preservation of the full audit trail of the payment.

Accounts Payable Automation solutions like MineralTree streamline and eliminate the inefficiencies embedded in manual accounts payable at every step of the process by:

  • Integrating directly with your accounting system and bank account
  • Recording invoice data into your accounting system at 99.5% accuracy
  • Automatically routing invoices to department heads and executive for approvals and authorizations
  • Providing mobile access to a platform designed for payment approvals and authorizations
  • Offering all payment methods, including paper check, in one centralized location
  • Storing complete audit trails for each payment in one unified repository

MineralTree customers typically see up to 60% increases in efficiency, and a fully repaid investment within two months of implementation.

Curious to see what your vendor payment process would look like with MineralTree? Schedule a personalized demo.

We're transforming accounting by automating Accounts Payable and B2B Payments for mid-sized companies. Our award-winning solution has helped over one thousand businesses transform accounts payable from a source of inefficiency and fraud risk to a secure and strategic profit center that provides visibility into key cost drivers.

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