CFOs and Finance Directors have long been aware of the accounts payable automation benefits. They include less lag time, improved accuracy, and reduced staffing costs. In case you need a quick reminder, check out 3 Ways to Streamline Accounting With Business Process Automation.
But how do you get the CEO on board with this new technology?
Accounting personnel may encounter a variety of obstacles when trying to get the rest of the company to buy in to accounts payable automation benefits. In addition to general budget limitations, these obstacles may include:
- Benefits don’t appear relevant at the corporate level: Adopting document management and accounts payable automation may be important for the accounting department, but executives might not see how AP automation benefits the company as a whole.
- Reluctance to take on a new initiative: The CEO may be reluctant to push a new initiative that moves employees away from existing, paper-based processes. For example, if executives anticipate employee resistance based on previous experience, they may avoid taking on process changes that don’t seem absolutely necessary.
- Unclear purpose for saved time: The value of improving efficiency might appear self-evident, but the CEO wants to see how that efficiency gain plays out. If accounts payable automation benefits include saving your department a certain number of hours, do you plan to have employees take on additional duties, or would you reduce your headcount to save money for the company?
While the direct AP automation benefits are usually sufficient by themselves to justify the cost of a document management solution, the political reality in most organizations is that this is usually not enough. When proposing a document management system for the accounting department, it’s important to show how this tool would impact departments across the company and its executives.
Here are 6 reasons AP automation benefits should matter to the CEO:
- Improved vendor relationships: Failing to pay your vendors and suppliers is a sure way to strain those relationships. The importance of good vendor relationships usually makes a lot of sense to management at midsize companies, depending on your supply chain management and how much your company relies on the quality and speed of your vendors. Most organizations are now looking at Supplier Relationship Management as a key strategic priority, and paying vendors in an orderly manner is a key part of these relationships.
- Save money through faster processing: Many suppliers offer early payment discounts of 2 or 3 percent. With an inefficient system, it could take weeks to route and approve invoices for payment, causing you to miss out on these savings. If your suppliers offer early payment discounts, this is a straightforward way to show executives the cost benefits of accounts payable automation.
- Establish a starting point for broader Business Process Transformation initiatives: Upper management is usually eager to make a company more efficient and modern, and replacing paper for digital document management is clearly a move in the right direction. This is more of an emotional argument than a clear calculation of savings, and its effectiveness depends on the personality of the CEO.
- Reduce audit and compliance risk: At the core of most compliance and audit processes is the need to quickly document who authorized payment, what was authorized, when it was authorized and paid, and why the payment was made. Quickly providing this audit trail at large scale in a paper world is challenging at best – and the ability to do so is a key factor in reducing audit, legal, and compliance risk.
- Free up finance staff time for more strategic initiatives: APQC reports that nearly 75% of organizations have established financial process transformation initiatives, designed to turn their finance departments into more strategic players. APQC notes that “36% of organizations say their financial processes are misaligned with the “pace and needs of their unfolding business strategy.” This means that poor financial processes not only impact financial operations, but have a “ripple” impact throughout the organization.
- AP – and other financial processes – are critical to the ability of everyone else to get their job done—including sales and customer service: Financial processes are unique in that the information and documents that are created by and surround financial processes are used in countless other processes and departments, including sales and customer service. APQC notes, “Most companies are losing as much as 1% of sales due to poor planning and decision making. Why? Business decision makers misinterpret or discard financial analysis.” Organizations with poor financial processes typically have an error rate of 3.3% in their sales forecasts, compared to 1.5% at leading-edge organizations.
Document management technologies clearly can help organizations automate accounting processes. But document management does far more than simply provide a predictable place and structure to store documents.
- Document management creates a framework to capture not only documents, but information, as close as possible to its point of creation.
- Document management lays the groundwork for intelligent indexing of documents, making it possible to find the right document at exactly the right time in a business process or customer interaction.
- The digitization of information makes it possible to automate key information workflows and increase business agility.
It is this expanded role and vision that is at the heart of the opportunity that begins with AP automation.
Learn how to reduce costs in your accounting process. Check out 3 Ways to Streamline Accounting With Business Process Automation.