In this unprecedented year, businesses have had to make several of the most profound, time-sensitive and consequential decisions of their professional careers. They had to decide whether to close temporarily, pursue new markets, and invest in new technologies — to name just a few of many examples.
From a financial standpoint, they have been deciding on important matters such as how to make adjustments to control cash flows, payments and invoices.
While making these adjustments, many have been grappling with an important decision: whether to continue using a manual paper process to execute their accounts payable (AP) processes or shift to a paperless AP system.
For these finance pros, this paper or paperless AP automation decision has been tough because of misconceptions about each approach. There is too much incomplete, outdated, and unclear information to plow through.
To help you get through this process effectively and come out stronger, we have created this list of misconceptions you may have encountered.
With a deeper understanding of what the truths are based on data, we believe you will be able to make a smarter decision as to whether paper or paperless AP automation suits your business best.
Misconception One: Making a decision on paperless accounts payable automation isn’t urgent
If there has ever been a year when business decisions have been urgent, this is the one. Financial pros are having to be exceptionally disciplined and careful in tracking money flowing in and out because of widespread economic uncertainty.
Directly linked to this tracking of money is the AP process, which is central to making sure the company pays its bills on time and avoids late fees or disconnect notices.
But in this unusual economic climate, cashflows are lower than normal for many businesses. Markets and industries are flowing in new and often unexpected directions – suddenly. All business matters have become more urgent.
Automating your AP process can help you adjust faster to these surprising redirections of funds and market fluctuations, and can save your company money and time. As such, going paperless could be an urgent matter for your business.
“In 2020, the accounts payable profession continues to gain momentum and impact business operations and results in an increasingly strategic way. The global uncertainty that pervades today’s market indicates the very real threat of a deep economic downturn. In response, the CFO’s new ‘hierarchy of needs’ has placed a laser focus on business continuity and ensuring the liquidity needed to fund ongoing operations. Against the backdrop of a global pandemic, this renewed focus on liquidity and cash management is poised to pull AP into the limelight with an urgency never before seen.”
Finance pros feel covered in paper
There’s another reason moving to paperless AP automation has become more urgent. It’s personal and emotional. We learned from our research that many finance pros literally feel covered in paper when doing their work.
You need and want relief from the avalanche of AP paperwork. You have an urgent need for this relief.
Other emotional needs are in play. Financial pros are relying on payments and invoices being delivered to offices that may be closed, delaying the process while frustrating customers, suppliers and vendors.
Delays waste time sorting through where an invoice is, how to get it back,and where it should be sent. Late payments also strain business relationships with people who keep your company solvent especially your paying customers. In any economic conditions, keeping customers happy remains a time-sensitive matter.
The urgency to move to paperless is also being driven by the logistical challenges in running AP processes on paper with huge proportions of the employee base working from home.
It’s expensive, inconvenient and time-consuming for employees to have to leave their home offices to go to their corporate offices to process paper checks and invoices, get the CEO to sign them in person and drive to the post office to mail checks.
We are not living in an economic climate with high tolerances for these inefficiencies. If the process had been a paperless AP automation solution, it could be done online electronically faster and easier without having to deal with disheveled paper documents.
Misconception Two: Paper checks are not expensive to a business
You may have heard paper checks are an inexpensive way to make payments.
That’s a misconception.
Bank of America estimates that the costs of processing a single business check range from $4 to $20. This includes the check stock, envelopes, stamps and the time consumed with writing, mailing, collecting and reconciling payments. Because they are labor intensive, often delayed and mistake-prone, paper checks frequently increase corporate expenses and reduce profits. By contrast, digital payments tend to be much less expensive than paper checks.
Misconception Three: Eliminating paper checks and invoices is not a business priority
Businesses have plenty to be concerned about and many new challenges to overcome. As such, it could be assumed that eliminating paper checks and invoices does not rank high on their list of priorities.
But’s that not the case.
Misconception Four: Getting paper invoices approved is the process that frustrates AP managers the most
It’s a misconception that getting invoices approved is the biggest frustration AP managers have. These approvals are a problem, no doubt, but it’s not what frustrates them the most.
What does is invoice coding and data entry.
But what’s even more striking is how much more this frustrates them than anything else including getting invoices approved and manual purchase order matching.
This wide disparity between the level of frustration with invoice coding and data entry and the other frustrations reveals how keen finance pros are to stop doing tedious, manual tasks that paper systems so often require.
Misconception Five: Automating your AP processes means you will have to abandon all your current systems and processes
It’s an incorrect view that shifting from a manual to paperless AP automation solution must be an all or nothing proposition.
You don’t have to completely abandon all the softwares, applications, systems and processes you already use. You can maintain your company’s current workflows and pay vendors electronically while maintaining all their banking relationships and current approval procedures.
You can take a gradual approach. For instance, you could install software for the payment process first while keeping some of your processes and technologies. You can continue to have paper checks as part of this process for specific cases that best suit you, such as important customer relationships in which they prefer to be paid with paper checks.
You can integrate AP software with your accounting software immediately but send your payments through in a phased approach.
There are many additional ways to gradually start to integrate paperless AP automation without having to completely change all the ways you’ve been doing business.
Misconception Six: You will lose control of your process
It’s understandable that many financial pros are concerned about losing control of their AP processes, departments, and responsibilities if they shift from paper to paperless.
It’s natural that changes can be difficult and cause uncertainty about how they will affect their business, department and relationships with other internal departments, employees, customers, suppliers and vendors.
With paperless AP automation, you can keep your existing controls in place, such as invoice and payment approvals, but you will gain more control over your processes by automating these approvals and having your data stored in the cloud.
CFOs and controllers can safeguard sensitive financial information by setting strict guidelines and controls around who in the company can access it. These executives can also set up payment controls, ensuring all payments are reviewed and approved before payment execution begins.
Automating the process will free up your employees from those tasks to think about more important ways to grow the business. They can plan more strategically about how to serve customers with quicker and less expensive payments.
Misconception Seven: Paperless accounts payable automation will make more work for your AP team
It’s a false opinion that a paperless AP system will create more work for your team.
Actually, one of the most compelling reasons to automate your AP processes is so you don’t have to do as many manual tasks. Instead, you can concentrate on higher-value strategic projects that help grow your business.
Think of the situation this way: With an automated process, there are basically only three times when a person needs to get involved: coding the invoices, approving the invoices and selecting invoices for payment.
Now consider all the different ways a person has to get involved in the paper process. They must print, get approvals, and mail the checks. They need to manually fix errors in expense reports and Excel spread speeds. The list goes on.
It’s much more labor-intensive using paper processes.
To make your company successful in the new economy, it’s time to stop believing the numerous misconceptions about using paper or going paperless.
Concentrate on what’s true.
Believe this “Golden Rule of AP Automation”: Paper is a problem.
Because it is.