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How Nonprofits Can Regain Cash, Controls & Compliance with AP Automation

Webinar Transcription

Britney: For today’s webinar we will be covering How Nonprofits Can Regain The Three C’s With Automation. That includes cash management, control over your payables and compliance. Before we begin I do wanna cover a few items, you all are in listen only mode, but we do wanna hear any questions that you do have at the end of the webinar. So since we’ll be having a Q&A if you have question throughout please just put them into the questions box in your control panel, and we’ll make sure to try to answer as many as we can. Also following the webinar I will be sending an email with the recording as well as the slide decks and you expect that by tomorrow morning from me. And today’s your speaker will be Pamela Klein, and she’s our Sales Manager for Nonprofit Vertical, and Pam if you wanna get us started.

Pamela: Thanks so much Britney I appreciate you doing the introduction there. My name again is Pamela Klein, and I’m the Sales Manager here at Avidxchange, and my focus is specifically on the nonprofit market. In fact prior to coming to Avid I’ve actually worked with nonprofit organizations for well over seven years, and so I understand a lot of the challenges that nonprofits face. Those includes few resources, turnover, time you never have enough of it, tight budgets, effectively managing internal controls, and of course keeping those costs down.

So, the goal for our presentation today is really to just kind of give you a greater understanding of what an AP automation is, and how we can help you streamline that AP process so that you can be more strategic, and really focus on your core mission so that you can better serve your communities.

So, to give you a little recap of our agenda for today well I’ve just done my introduction, we’re gonna give you a little of information about the future of accounts payable, how to regain the three C’s being cash management, control over your payables as well as compliance. Talk a little bit about AP automation specifically for the nonprofit space. We’ll have a little audience poll at the end and then time permitting, we’ll have a little Q&A so we can address some questions that may come up based on the information that we provide to you today.

So to start we really wanna kinda talk a little bit about what’s driving that need for automation? We know that some of your strategic initiatives today are really growing your programs. How do you reduce your cost, increase donor and grant support and engagement? Really helping you gain that greatest efficiency possible while also reducing your operational costs.

Some of the factors here are growth. Your organization is growing and with that growth more invoices are coming in, more payments are required. So, folks are really looking for ways to better manage that growth without having to avoid additional staff members. Streamlining the process, too much time today is dedicated to manual processes like data entry, looking to gain greater control and increase visibility into that entire AP process. And that will be a key component for today as we go through our presentation.

Mobile access, folks more and more traveling, work offsite. Need to have visibility at 24/7, at any time be able to have access into that invoice approval and processing status from the moment that invoice is received. So, from any device from anywhere they wanna again have instant access to all of that information.

Also internal controls and processes, folks have limited reporting capabilities, analytics, understanding what’s really involved in that process today, what kind of resources are being utilized towards that. Audit trail capabilities, a real important factor for nonprofits is reporting to your stakeholders, having accountability and showing that you’ve taken steps to be able to manage that in your system effectively.

So, to kind of take a look and understand what the state looks like prior to automation. We understand that AP person is really key to managing a lot of aspects of this process. And how is that person utilizing their time today? I’m I getting the most out of the capabilities and resources that you have in place? So, what are some of the things that are happening today? Time is wasted on manual tasks such as routing, processing and signing off procedures. What does that process look like to get invoices approved, limited control and visibility into the process? Again understanding some of those analytics behind, how much time is it taking pick get those approval through the system? What effect does that have on my cash management, on my reporting on difficult locating or finding documents? Does that become an issue for you during audit or even from a regulatory compliance?

Increased risk of error and slowdowns in the AP process due to human involvement. Are there ways to detect these errors in advance and have a full auditing control over every step of this process? Also there’s that component of filing away all of this paper, and very often folks have sensitive documents that need to be locked away. Think about all that space that file cabinets are taking up and the ability to try to track down and find that information easily in the future.

These are just a number of the challenges that folks are facing, and the time associated with it is really the key component here. I’m I utilizing my AP staff time today most effectively? Can I use them in a more strategic way to help better grow our mission?

So, what does the state look like after automation? So, the goals here, really to kind of streamline the process, that whole approval process. Tracking invoices electronically again at any step in that process, and have a single repository for all invoices so I can access them instantly from anywhere. Insight into the data, increase visibility into invoice and payment data to improve performance. Manage mistakes in advance to prevent them from happening in the future.

Up to date reporting, the ability to gain powerful reporting and added visibility to all documents within the organization literally at the click of a button. Being able to pull up metrics that help me manage my business, understand and report on things in the proper cycle on proper periods, understanding my accrual at any step of that process. Fraud protection, more and more we’re starting to see folks looking for ways to prevent fraud. Have a more strict adherence to business rules reducing opportunities for fraud to even happen in the first place.

So what is automation? And to help kind of illustrate this and understand what is those steps in the process look like, this is really important for folks to even evaluate, where do I stand today? what does this look like for my organization? How does automation help me? And the first way to really kind of get an understanding into that is understanding what does that process look like today. And typically we break this down into three steps, how your department receives invoices, how do they process them, and then how do you make those payments.

So, to follow each one of these bubble for you, essentially invoices are coming in, they may come in in a variety of different ways. Could be mail, it could be maybe an email. Someone then needs to open up all of that mail, now I might need to get this routed, maybe match it up against a purchase order that might be part of that process today. I need to now get these to the appropriate folks for approval.

And that process might be very unique to each organization based on the entity within the organization of how that rolls up for approval. And again, being able to now manage all of this information, get that information either into email format, maybe you’re intercompany. Mailing that information, maybe you have multiple locations where again you’re needing to get all that information out. At some point in that process someone needs to code that invoice.

And then we have that approval process and very often you find that you might be reaching out to that person multiple times by email. Maybe that person has hundreds of emails that they’re getting and they’re not responding timely to you. As that person is approving that invoice now they might need to match that up against the budget, to understand where is my cash management look like today? Where are my expenses? Does that force them to have to now open the accounting system to be able to have visibility into that information?

And this next bubble is a really key component for everybody. And this is where again, all of that information that you’ve now collected manually is manually entered into the accounting system invoice by invoice. Once that information is now in the accounting system, it’s being posted to the GL, at which point you’re then creating that payment batch to initiate those payments and that involves printing those checks out. Maybe I have an electronic process that I’ve been trying to put in place and managing all that banking data for those different types of payment options that I wanna make available to vendors.

Stuffing envelopes, trying to again get all of that information together after which I’m now attaching those checks to all of that paper that I’ve now printed out whether it’s the PO, the approval, the actual invoice so that can be approved before we now mail that out for payment.

Now, an important step here is now filing away all those invoices. So, that again they’re stored for future reference for audit or the later research. And very often what happens is sometimes those items are misfiled. Maybe somebody took one of those invoices out to review but forgot to put it back.

This is essentially the big cycle of AP automation from beginning to end. And with this slide what we’re really representing for you are all the items that Avidxchange and all the processes that we can replace through a variety of technology and people. So, we have a SAS Solution, and it’s a combination of technology and software with a high level of service to back the software.

We know each client has a unique process, so what we try to do is replicate that process through an electronic process by applying technology to it within little to no change as possible. So, essentially what will happen is invoices, we’re going to manage getting all of those into the system and getting them into an electronic format. You no longer have to open mail, our team is going to manage that process for you.

If you have PO processes in place, we can help identify that and work with that through our system. Everything is now routed electronically and again, that’s based on those business rules that you have in place that mirror the system that you have in place for all those required approval, whether that’s based on a dollar value or the roll up of management associate with each given entity that you may have.

Now there’s a couple bubbles here, you’ll notice that Avidxchange does not automate and there’s a reason for that, because the coding is something unique to your organization. So we wouldn’t take it upon ourselves to take over that process, we’re gonna leave that in your hands. However, we’re gonna put tools in place to make that process as easy as possible. Again, that will now route automatically, through the process of each step of the approval takes place, giving you control to match that against your budget so certain folks can have insight into the cash management at any point in time.

And this is really where that big aha moment comes from, and the ability to have to enter all of these invoices manually goes away. You can essentially with the click of a button upload a file that now creates all of those open payables in your accounting system. So, think about the amount of time that you’re spending today and that all goes away.

You can then obviously post all of those invoices to your GL, at which point you’re creating your payment file. And again, this is another aspect of the process not everyone always thinks about but creating that payment batch, having to send that to your printer, all of that goes away. Maybe you have initiatives for trying to set up electronic payments, and again you have all the challenges associated with trying to manage that.

Now you can simply upload a file and Avid will facilitate those payments on your behalf. And not before going through another control level where all of those invoices and data associated with those payments can be pre-approved before we facilitate those payments on your behalf.

This also gives your vendors additional capabilities of how they wanna process those payments. If they prefer an electronic method we can manage that for them. Because we started this process electronically now all of your invoices are in an electronic state. So with a couple of keystrokes you can easily pull up an invoice or a series of invoices or report on different aspects of the system, whether it’s cash accruals for a period of time or understanding vendor spend for a period of time or even understanding what pending approvals are still sitting out there. I have direct visibility to that with a couple of clicks.

And then again any time you need to research anything, whether an auditor comes in and they require that you give them those reports or they want read only access to the system so they can enter a couple of keys and pull up all of that necessary information. All of this, every step of the way is accounted for with the full audit trail on every step of the process.

So now that we kind of understand a little bit about what those steps are involved with the AP process, we’re gonna talk a little bit about how to regain control over cash management, over your payable and on compliance end. So, cash management, a lot of folks don’t realize all of the costs associated with manually handling all of these different processes.

So, folks who automate actually recognize a 60% reduction in their processing cost when processing invoices and payments. Because we’re eliminating all of the manual tasks associated with this, think about all of the time that that’s going to free up for your team. And the idea being that we’re gonna use that person’s time more strategically to benefit your organization.

Another benefit of automating is that approval process which can typically take 28 days on average is reduced down to two to three days. And one of the huge benefits of this is, “Hey, I have visibility I know exactly where that invoice is in any step of that workflow process,” but in addition we can avoid late fees because now I’m getting all those invoices through the process as quickly as possible.

So, to understand a little bit about the return on investment we have an example here that we utilize, and again we can always tailor this for your organization. But to make things simple we are basing this on number of invoices a month with the number of payments, and how many folks are currently managing that processing today. So, for this example where using a 1000 invoices per month, and 750 payments and that one poor person who has to process all of these on a given monthly basis.

The end result of this analysis actually reflect a huge savings not only in money but also in time. By processing 1000 invoices a month and 750 payments monthly you can recognize a savings of over $12,000 and 80 hours. That’s two weeks of someone’s time spent processing all of those invoices and payments.

And to kind of further break that down so you understand where those numbers are coming from, the industry average is the cost it takes to process an invoice is $9 .And by automating 1000 invoices a month you can actually save $7500 per month and that’s an 83% reduction. Where at Avidxchange by processing and automating this it actually is as low $1500.

On, the payment side likewise it’s over the industry average, $7.15 to process a single payment. And again we’re thinking about that person’s time associated with that process. And again you can achieve a monthly savings of almost $5,000 and again a 90% reduction in those costs and time associated with processing that information.

The next step that we’re gonna move into is the ability to control the account payable process. And with gaining control, because we are a SAS Solution there’s a number of things that go away. One is no IT expert is needed, because there’s no software to install, nothing to manage on that end. Again, we can reduce the amount of resources required to manage this.

Think about all those times when you have an application and you need to request a change and trying to go to your IT folks and how long you’re waiting for that change to take place. Again there’s no expensive hardware to manage this. All invoices and files are not stored on your system, they don’t have to worry about managing that.

So, we have mobile invoice and payment approvals so folks from their electronic device, whether it’s an Android or Apple device can simply access this information from anywhere at any time and it’s highly scalable. And this is key because as your organization continues to grow you wanna make sure that we can handle the three times capacity of as those invoices come in, you have an electronic process to help manage that as effectively as possible.

Again, there’s no user license either. So you don’t have to worry about as you add additional people, “I don’t have to have any cost associated with adding those additional users to the system.”

And here’s the example of one of our clients, they’ve implemented Avidxchange a year ago, The Foundation for Global Impact. And in their first year of implementing an automated process, they’ve automatically seen a 20% reduction in their processing cost. And they’ve been quoted saying “Avidxchange has provided us with an efficient solution for paperless invoicing, and has reduced the steps in our AP process.” Essentially really the major impact for them was to scale for growth and improve those controls and visibility into spend. And that’s some of the main goals that we try to achieve for all of our clients.

And finally what we’re going to talk a little bit about is increased tax compliance and fraud protection. There are more and more folks are really focused on, How I can put a process in place to prevent fraud, have greater compliance so as I report to my stakeholders they know that I’m accountable for the governance of all this money that I am managing? And that we’re putting the best process in place so I can be effectively managing my business.

So, a couple of those internal control initiatives include electronic invoice and payment images that make documents easier to access and search in one location. Again, I’m not searching in multiple places to try to find access to that information. I need to set permission based on what level of access someone can have. So, I might have sensitive information that can only be accessed by certain folks or certain features that I need certain folks to be able to access. All of that can be programmed within the system to match up with your business rules that you have in place today.

Sending payments with the appropriate approvals associated with that. Again, no longer having to have paper where things can be floating around. Again, all of that information is housed in one location so that folks can have that final level of visibility and control in place to ensure that there’s no fraud associated with any of these invoice going through the system.

We’re also providing multiple payment options. And a lot of folks today again, because fraud is becoming so much more of a concern for many folks, we wanna provide additional options. Maybe your vendors want additional ways to receive their payment because they wanna receive it faster. It helps their business, but it also helps you because you don’t have to necessarily give your checking information. If we do process a check we do have full positive pay associated with processing those check payments.

Very often again, folks are trying to think of ways to initiate electronic programs for payment and they find that there’s a number of challenges associated with that in terms of managing that banking data and such. Or trying to find out who received a credit card. These are all things that again, can be automated through our payment process.

And finally real-time details in remediation. Understanding and being able to reconcile against all of your payments, understanding what that payment status is at any given point in time. Is anything missing? Where is it? Having full control, over understanding every step of the payment process and where your payments are.

So, let’s talk a little bit about fraud. 48% of payment fraud is actually tracked back to paper checks. And why is that? Data is actually not secured in a paper based environment. So, all of your banking information, anything someone needs to be able to fraudulently create big checks is right on that check itself with your routing number, your signatures. And more and more folks are looking for ways to try to avoid going through business rules internally. Again, a lot of times by the time you identify that an issue has happened it’s actually too late. So, you wanna have processes in place to prevent that from happening at all.

And here’s an example of a woman who’s actually had a situation where her information was stolen and counterfeit checks were drawn from her account forging her signature. And over nine checks were cashed totaling over $15,000. This is someone who had been in accounts payable for 20 years, had just started up her own business and was trying to find out… and didn’t find out until afterwards that this had happened. And it was only through her bank identifying that one of the checks had an incorrect spelling of her organization name to point that out.

So, again folks are really looking to, how do I put a process in place to prevent that from happening? Again, securing my banking information and providing alternative methods of payment to avoid that at all. So, you’re probably thinking a little bit how does automation prevent fraud?

So, automation actually enforces strict adherence to business rules, reducing opportunities to commit fraud. Think about someone that might put fake vendors in the system or just not going through the appropriate approval process trying to get something through the system. Maybe there’s duplicates.

Every employee check that goes through an automated process is scrutinized for legitimacy before it even makes it into the system, and there’s a full audit trail on every step of that process. Every payment has positive pay and approval workflows to verify against fraud, to identify that it is a valid invoice and that it is appropriate for payment.

So, we’re going to talk a little bit now about AP automation for nonprofits, and what are some the benefits that are associated with automating this process? So, by automating you actually have the ability to receive 100% of your invoices electronically. We can facilitate 100% data capture. All of that header detail on all of those invoices with 99% accuracy guaranteed, enhanced workflows and approvals.

So, again we mimic your business process and put that into an electronic format to route all of those approvals to the appropriate folks in the process. Can pass all of that data into your accounting system to prevent errors and also no manual data entry associated with that process. And we can facilitate up to 100% of your payments regardless of the vendor, what type of payment they wanna receive. We can manage that process end to end while giving you full visibility into these invoices at every step of that process. Again, we’re processing all of these invoices on your behalf and in a process that makes sense for your organization to streamline it and make it as effective as possible.

So, we’re going to talk a little bit about, well, how do all those invoices make it into the system in the first place? And there’s a number of different ways that we can actually receive invoices in. And it’s important to know we don’t dictate to your vendor how do they submit invoices to us based on whatever that process looks like for them today. What they have capabilities to do, we can match up with that process. So, if their process is to mail on a paper invoice it’s a simple change of address on our part and we can have all of those invoices now come to Avid where we will then enter all of those invoices into the system to turn them into an electronic format.

For those situations where maybe you receive an invoice at your location for any reason, maybe someone handed you that invoice or it needs to be processed and been paid on the spot. You have the ability also to enter invoices into the system and get them through that immediate workflow process.

If you have vendors that have the ability to submit data electronically, whether they have EDI or API capabilities we can work with that vendor to have that data pulled into our system through that format. Vendor portal if your vendor’s process is, they want to upload that invoice to our portal to ensure that it’s been received, we can certainly work with them to provide that portal to them.

And finally, we can receive invoices by email. And we’ve noticed that we process over a million invoices every month and 80% of those invoices are actually in an electronic format. And when those invoices come in their automatically uploaded into our system. So, now that we’ve gotten all of these invoices into an electronic format it is our team, and this is part of that service component, where we’re extracting all of the data points from each and every one of those invoices. And that includes the vendor name, the ship to look location or the entity, the amount of that invoice, the due dates etc. The terms associated with that given invoice all of those data points are entered into the system again based on that information that’s being entered that will flow into, based on your business rules what that workflow looks like for each and every invoice.

We’re also analyzing each and every one of these invoices to ensure that there’s no duplicate and ensuring that all of the information is valid before it’s even entered into the system. And again once all of those data points are then analyzed, it’s submitted through workflow at which point your team then receives an email to indicate, based on what their approval status or level is, that they have invoices in their inbox for approval.

And what we’re gonna do now is show you a little bit about what that process looks like and show you in our application what each different folks are gonna see. So, when I receive my email, it says I have invoices for approval. I can now open up the application directly and I can see a listing of all the invoices that I have for approval with all the basic data associated with every one of those invoices.

I can see the invoice date, the due date, the vendor again, important, I can see what step of the workflow I am in right now, and as this goes and flows through a workflow process, each individual user will see the role that they’re in, how long that’s been sitting there. And again, I can sort and filter each and every one of these columns so if I wanna prioritize these by those coming through the soonest, I can simply click a button and again prioritize all those invoices in my inbox.

By clicking on an individual invoice number I am now opening up that specific Invoice record at which point I can see the invoice image. And like we’ve mentioned earlier, this can be 1 or up to 100, 200 however long that invoice is. All of that information will appear right here and then I can sort through, I can download it. I can verify all of the header information associated with this invoice, so I can verify that all of that information is correct.

I can also identify in that header if there is a PO associated with that given invoice. If you’re utilizing our PO functionality, it will actually tie this invoice back to that purchase order and all of the line items and coding associated with that purchase order will actually upload automatically to this invoice. So, that would avoid any duplicate entry on that part.

Now, for each and every invoice that goes through there’s a coding process that you may have in place, and there are a number of different processes that we have to make that as easy as possible. We can identify pre-coded items or again we can enter that information one off. And if I don’t know what the actual GL code is I can enter a description to pull up the code associated with that. We have validations in place to ensure that the only coding associated with each given entity will pull up.

I can also look at my budget month to date and year to date so I can understand what my cash flow looks like at any given point during a given period of time. I can also create comments on these invoices, whether I wanna reach out to another internal member of my team to ask a question about a given invoice. Or maybe I wanna reach out to the vendor about a question I have on that invoice. All of that information can be done right directly in the system and a full audit trail of every step this invoice takes through the process is logged. And you’ll see that there’s a time and date stamp associated with each of the different steps that this invoice took through that approval process.

If I have comments associated with these invoice I’ll see these listed here. I can see every step of the workflow and all the different steps that someone took throughout that approval process. If someone had the permission to be able to edit an invoice all of those changes will also be reflected here. So, you have complete compliance on each and every invoice in the system.

Now, that all of your invoices are housed in an electronic format you have the ability to search these through our electronic filing system here. And with the number of different filters you can search for invoices. Maybe I wanna look for a specific vendor over a period of time, I wanna see all pending approval invoices, maybe I wanna see approved ones for a given period of time for a specific vendor, all of that information can be easily entered in here and I can search for them.

And then I can easily create reports by either exporting this data to Excel or if I wanna create a PDF report of all of this information, which is a wonderful feature super easy to use. I create report and it will ask me what information I want to be included on that report.

And that’s all of this full detail including the invoice image, the summary, the header information, each line item all the distributions associated with those line items. Again, approval history as well as payment details associated with these invoices. I simply create that report and I can put it right into PDF and have all of that information at my fingertips.

Now, if you have an order to come in you can either give them read only access to your system, or if I need to generate those reports for them I can simply click a few buttons and pass that information along. And again this is really giving you that full accountability for managing this process end to end. So, we’ve gone through three quarters of that automation cycle we’re now gonna look at the final piece in terms of the payment application and what this looks like today.

So again, what we’re doing to help improve this process is rather than when you create that payment batch submitting it to a printer for printing those checks, instead you would actually upload that file right back into Avidxchange. And you can simply select that file and pull that into the application. I can see a listing of every payment batch that I’ve uploaded and we’ll identify who uploaded the batch, the number of payments associated with it, and then all of the details of every payment associated with each given batch.

So, I have full visibility into every single payment that’s being processed through Avid and that includes the banking information associated with each payment. Something important to note at this point is whether you work with one bank, if I work with five banks, our product is bank agnostic. So, regardless of whether you have one bank account or 50 bank accounts we can manage it regardless of how many you have.

And again we identify the check number from your accounting system again, that will always be the system of record and that’s identified here. And you will see the payment type that was initiated by Avidxchange. And you can understand where in the step that process is at any point in time so that you have full viability into all of your payment information.

Before we actually facilitate those payments though we can have another control in place. And what we’ll do then is you have the ability to establish another approval workflow. And again this generates an email to the folks that are part of that approval process at which point they can simply click on that link to open up the application. And right within the application they have the ability to view every payment batch that’s coming to them for approval with all of the details associated with that.

And, again you’ll see that there’s a full audit trail again and none of this audit trail can be additive. So again it’s a strict control that’s in place that your auditors will love. You also have the ability to look at the individual invoice information. So, by clicking on this hyperlink it’ll actually open up the actual invoice image.

In addition when we facilitate those payments on your behalf, whether that’s a check payment or if it’s an electronic payments which could be a virtual card maybe or enhanced NCH. Again, we wanna identify how they need to apply each and every one of these payments. So all of that information is distributed to the vendor with those payments so that they can clearly apply that payment without issue. However, if they do have a question they can reach right out to us and we have access to information that we can provide to them to ensure that this payment is being processed timely.

Another key aspect of our payment program is giving each user additional visibility to understand was a payment processed? Today right now your AP person may be receiving multiple phone calls from different departments finding out if a payment was in fact processed. So, if in fact you wanna help reduce some of those calls we can actually sync with the accounting system so that the payment details from the accounting system will pull now over into the individual Invoice record.

So, a person can pull up a given invoice and see that a check has been issued for that given invoice, and they can see the status of it. So they know if it’s been cleared they can also see if it’s been mailed out, and if that payment was processed through Avid Pay can identify if that was a check or it was an electronic payment option. And that will help you easily answer questions for your vendors without again having to continually call the AP department to find out the status of those payments.

Interested in learning more from an AP Automation expert?
Hosted By:
Pamela Klein
Nonprofit Sales Manager at AvidXchange