How Document Management Can Benefit Payables Departments
From managing invoices to documenting payments, your accounts payables department tracks vital business documents that keep suppliers happy and operations running smoothly. But all it takes is one lost invoice or a misplaced contract to disrupt your company’s rhythm.
In this article, we’ll dive into how document management solutions can benefit payables, and what you can do to implement document management best practices in your business.
What Document Management Can Do for Your Accounts Payable
Good document management saves a company time and money because it automates processes that were once done by hand. No longer do accounting departments have to print records, share physical files, or go digging through filing cabinets for archived documents.
Instead, files are easily shared, duplicated, and edited. This facilitates collaboration, speeding the accounting process and lowering the rate of errors.
The time spent looking for misplaced documents alone makes digital content management worth the money in terms of efficiency and avoiding frustration. Dr. Graham Smith found that employees spend up to 50% of their time looking for documents, and organizations lose $19,732 per information worker on average from poor document management.
In fact, the Association for Information and Image Management finds the ROI of enterprise content management is greater for improved worker efficiency than for paper reduction. Since managed documents don’t get lost, misfiled, or destroyed, accounts payables departments can increase efficiency and successfully execute contracts, protecting the business’s interests and the bottom line.
Strengthening Internal Controls
Within an accounts payables department, internal controls ensure that no one person can issue company money. Internal controls are designed to stop fraud, but when it’s difficult to locate and follow the paper trail, outgoing payments can become messy. In addition to the time and money benefits of content management, having a strong paper trail is especially important for outgoing cash from your company.
With digital documentation, executives can quickly review supporting documents before signing off on funds transfers. It also allows employees in different roles within the internal controls system to easily share documents and seamlessly pass items along the chain for further processing and approval.
Document management can become an important part of the culture of your accounts payables department, fostering transparency and ethics.
Vanderbilt University recently stated that a strong culture of internal controls where everyone believes in self-auditing is an important characteristic in any accounting department. An added benefit of content management is it makes routine audits much easier when all the documents are easily located. While document management alone won’t guarantee fraud prevention, it goes a long way toward making the internal controls process transparent.
Risks of Maintaining the Status Quo
Older systems of filing lead to risks in accounts payable. Deloitte’s report on improving accounts payable says streamlining your accounting processes can improve liquidity, manage funding gaps, and produce higher profits. However, many accounts payable departments fall into the same common traps.
First, they use manual processes for inputting, calculating, processing, and issuing payments, greatly increasing the chances of errors. The same companies then have difficulty verifying if deliveries match contractual terms, because the contract can’t be easily accessed. Finally, they don’t have adequate processes for avoiding late payments, over- or underpayments, and duplicate or missed payments.
Taken together, these faults compound into an accounting department that is overworked and underachieving, missing out on opportunities for early payment bonuses and rebate programs that could save the company money.
Making the Switch
Accounting professionals don’t need convincing to go paperless, and according to the Journal of Accountancy, most firms that make the switch later report they’re happy they did.
For most companies, a gradual switch from paper to enterprise content management makes sense. In many cases, offices will begin digitizing old records to reduce storage space while maintaining compliance requirements for archives of past records. Once old and current documents are digitized, it makes sense to establish a system to digitize and store incoming documents, and then train team members on how to use the system.
Each company’s implementation of document management will be different, so hiring professionals to help can be critical. Kelley Connect is a leading office technology company in the Pacific Northwest, offering custom document management solutions to industry-leading companies. Contact Kelley Connect today to see how we can help streamline your accounts payable department.