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Accounts payable teams swap paper for digital

Having already moved to the cloud, many finance departments are still managing payments manually. Prompted by the accuracy of new tools and the promise of reduced costs, many are now considering automating their accounts payable (AP) process. 

30th Jan 2020
Commercial Production Editor AccountingWEB.co.uk
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Although accounts payable is an age-old headache for finance teams, paper-based methods have persisted longer than many would have thought possible.

“Essentially, the early promises of optical character recognition (OCR) were not delivered and many companies that automated their AP processes ended up spending more time on exception handling,” said Kefron managing director Paul Kearns.

Accounts payable constraints 

The need for fraud-prevention controls imposed a high overhead processing cost on the function, but knowing what is being spent is equally important.

“As a manual process, there is a lack of visibility in accounts payable. It can potentially be a blind-spot as it’s difficult to determine the volumes and status of invoices and data at the different stages of the process,” said Kearns.

Human error and fraudulent alterations to payment details and data are a common issue with manually processing payments. A recent public sector example where a spreadsheet error resulted in almost £300,000 in excess benefit payments demonstrates the scale of loss that can happen.

Aside from costs linked to processing times and errors, manual processing also poses a higher risk of late payment penalties.

“In many cases, suppliers are part of a company’s supply-chain and not paying suppliers on time has a direct and tangible impact on business performance and revenues,” said Kearns.

Change of finance habits

Many finance departments have already moved to the cloud for basic compliance needs. Yet many payable clerks still type in invoices and manage payments the old-fashioned way with paper invoices. 

Ironically, many organisations have resisted accounts payable automation due to concerns around accuracy and security, with boards and finance managers reluctant to entrust their outgoings to a third-party automation provider.

From paper to digital processes 

Kefron, a specialist AP developer, is challenging these assumptions with a combination of automated functionality and a managed service. Founded in Dublin in the late 80s, the company moved from storing physical document to managing electronic versions.

“Customers want to eliminate paper from their office and digitise an established back-office business process,” said Kearns.

“Automation of processes using technology is high on the agenda and software vendors and consultancies are advising companies to look for parts of their business where routine, manual and repetitive work tasks take place. These are relatively low-risk places to start applying automation and can offer quick returns if the right technology is applied.”

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By Rozzo52
30th Jan 2020 10:22

I would shift to automated AP processing but it seems where an organisation has stock control this is a barrier to Automated AP processing. Current software vendors do not offer integration to invoices which are required to update stock.

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