If finance operations are a constant tug-of-war between competing priorities, financial controllers are the rope.
Today’s financial controllers are in the tough position of straddling two worlds: the strategic focus on the financial health of the business, and the day-to-day task of getting invoices paid on time. It’s a constant tug-of-war between competing priorities.
But we all know cash is king. That means invoice payments usually win out over strategic work. And the data proves it to be true in Deloitte Touche’s 2018 report, “Stepping Outside the Box: Elevating the Role of the Controller:”
- Of the 800 controllers surveyed, participants report spending 70% of their time on daily tactical activities (like paying invoices) and 30% on proactive planning.
- Those surveyed also reported that they’d prefer a 50/50 split of their time between tactical and strategic work.
At the same time, the role of the controller is changing. Ernst & Young’s report “The Changing Role of the Financial Controller” cites the following challenges in the evolving role of controllers:
- The finance organization’s role has shifted from tactical record-keeper to strategic business driver.
- There’s pressure to bring both better management insights from and efficiency to the finance organization.
- New regulations and global reach are driving increased complexity.
- The CFO (whose role is also evolving) is passing more strategic responsibilities to the controller.
In order to keep up with the increased responsibility and visibility of this changing role, controllers must find ways to minimize the time-consuming tactical activities on their plate. But how?
Automating accounts payable (AP) is a major step in the right direction. Taking hundreds of thousands of manual tasks and putting them through an automated AP workflow will help controllers shave off big chunks of time, reduce errors, improve vendor relationships, and even earn money where early-payment discounts and cash-back rebates are available.
Here are 3 ways automating accounts payable can help controllers shift the balance from tactical to strategic:
1. AP Automation Creates Efficiency by Eliminating Redundancy
Let’s say your team processes 1,000 invoices per month. It takes 5 minutes for your AP clerk to manually input each invoice. Invoices are then individually emailed to department heads for approval before submitting back to you (the controller) for payment. Maybe the approval email process takes 5 minutes per invoice as well – for standard processing.
But along the way there are problems. Your AP clerk may have about a 5% error rate on inputting invoices. Sometimes invoices are paid in duplicate by accident; sometimes they don’t get paid at all if a department head doesn’t respond with approval. And if your AP clerk is out sick, you’re stuck picking up the slack in terms of invoicing processing.
Instead of manually inputting hundreds of invoices, each invoice can be captured into your ERP automatically. Automated processes can also verify the invoice information and payment amounts to eliminate invoice errors and duplicate payments. There’s no individual person to rely on to make sure payments are made. In this scenario, it’s easy to see how AP automation supports massive efficiency gains – in the neighborhood of 80% for some businesses.
2. AP Automation Helps to Simplify the Finance Team’s Organizational Structure
There are a lot of disparate players in the AP process, and for some companies, they can all be located in different geographic locations. Consider another example:
The vendor submits the invoice to the AP clerk who inputs the invoice data it into the system of record. Then the AP clerk sends the invoice to the Controller to be passed on to the department head for approval. With a multitude of responsibilities to juggle, the department head lets the approval slide onto the back burner, resulting in the payment being late. The vendor follows up by sending the same invoice to another office location, and meanwhile the vendor reaches back out to the AP clerk at the first location again. The original AP clerk tracks down the initial email that was sent to the department head to follow up, but the AP clerk at the other office location has also now coded the second invoice and emailed it to the department head. What we have here is a mess, that unfortunately will require even more time and frustration to get cleaned up. With automation, this whole situation can be avoided from the beginning.
AP Automation moves the process away from juggling a mess of separate email chains and transforms it all into one centralized online workflow. Invoices are automatically uploaded and routed to approvers through a series of notifications. If a vendor calls to check the status of a payment, AP staff and department heads alike, from any location, can easily log into the AP Automation platform to find out the status of the invoice in real time. No more operating in the dark while processing invoices, and what this translates into for your team is the ability to accomplish the same amount of work while expending much less time and energy.
Centralized AP processes help with month-end close and audits as well. Eliminating invoice errors and duplicate payments means no more re-balancing of the books when you find a last-minute error, and no more interrupting employees around the company with fire drills to track down missing documents. Audits become much more streamlined when invoices live in one central location.
3. AP Automation Empowers the Entire Company to be Self-Sufficient
If your business is processing the bulk of its invoices manually, it’s pretty likely that your AP team is overwhelmed with inbound inquiries. This scenario routinely creates a strain between finance and the rest of the company. Invoices get processed slowly (if at all) and are lost easily. Department leaders get frustrated by slow payments and relationships with vendors deteriorate as a result.
AP Automation takes the onus off of finance staff and gives more control to the people who are most-directly impacted: the invoice approvers. Once an invoice is uploaded and verified, it is routed directly to the manager responsible for approving the payment. The invoice can be approved for payment or even disputed, depending on the manager’s review. If the manager doesn’t respond immediately, a series of automated reminders are sent to keep the invoice top of mind.
Automated AP workflows remove accounting staff as the single point of failure in the process. Vendors can take any concerns directly to the approver, and approvers can rest assured that invoices won’t get lost in the shuffle.
AP Automation Allows Controllers to Establish a More Forward-Thinking Mindset
When all this extra work is handled by an AP Automation solution, controllers now have time to focus on more strategic activities. That means getting ahead of the seemingly constantly shifting compliance landscape, staying on top of new regulations like ASC 606, proactively evaluating vendor relationships for cost savings, and sharing their vision for how the finance function can positively impact the business.
Here are just a few examples of how MineralTree customers have transformed their AP function and seen tremendous results:
- Appalachian Mountain Club and Attivio launched AP automation with MineralTree (including a new payment method) and significantly offset their costs with rebates.
- The Boston Celtics, Express Locations, and Moda Operandi all slashed their time spent on accounts payable by more than 50% using MineralTree.
- Community Food Bank of Eastern Oklahoma was able to reallocate time from manual AP processes to high-value tasks after implementing MineralTree.
If you are staring down a set of manual AP tasks and you’re ready to make a change, contact MineralTree to learn how your business can make the leap from manual to automated accounts payable.