5 Advantages of Automated Accounting Systems
I go to a lot of different businesses and speak to them about how their accounting systems, specifically, accounts payable, accounts receivable and purchase order processes operate. Why? At Datatime we have a Business Process Outsourcing (BPO) service that helps businesses become more efficient and effective by taking the manual processing out of their offices.
OK, I can hear you saying everyone makes this broad statement, so what exactly is this process and no bulldust, what benefits will we see? At Datatime and PNORS we appreciate clients who think and talk like this as it means that they care about outcomes and consider what they spend. We certainly do as well, and we want to work with businesses who have a great business acumen and put the time and effort into long-term growth.
To begin the process, we start by tailoring OUR processes to suit specific clients needs and then place more emphasis in areas that are most important. But let's take a generic situation as an example for us to determine the benefits of automating accounting processes.
The 5 Benefits of Automating your account processes.
1. Understanding the source of your documents leads to improvement opportunities.
Analysing the source of your documents creates understanding and is the first step in reducing manual data capture efforts with associated overheads of filing hardcopy data. Information can be captured from, hard copy mail, email attachments, Electronic Data Interchange (EDI), internal processes, managers receiving documents) and so on.
This gives you lots of ways to consider streamlining your existing processes. Classifying these ideas on an Effort/Cost Versus Benefit Matrix enables clients to make noticeably improved decisions.
2. Analysing opportunities for automation creates clarity on cost savings from your largest trading partners.
Receiving an email with a scanned document attached is not EDI (electronic data interchange). EDI is the transfer of data from one computer system to another by standardised message formatting, without the need for human intervention. EDI permits multiple companies, possibly in different countries, to exchange documents and trade electronically. Therefore, the attachment can be used to automate processes, but it needs to go through a capture stage and validation to ensure business rules are met.
The ‘data’ part of EDI is actually referring to a data file. This data file needs to be set up so it can be automatically imported into the finance system. From an effort versus reward perspective, we start with setting up EDI for your largest suppliers. The 80/20 rule applies you can consider automating other suppliers as a second step and you reduced your manual processing for 80% of your transactions.
3. Improvement in accuracy.
Often overlooked is the benefit of accuracy. Errors in over or underpayments are costly and embarrassing. Even a .05% error rate in keying invoices to be paid may be a substantial loss. This benefit also leads to peace of mind and is a good reason to be fully EDI compliant at a time that works for your business.
4. Automation helps reduce your suppliers & your staff workload.
In the case of accounts payable, suppliers may send multiple invoices as an attachment in an attempt to get paid. The business manager scans and emails the invoice to the accounts department! This may occur repeatedly creating extra work for the supplier and also manager. As a result, this may also lead to duplicate payment. Automating your accounting process negates this process and leads to the cultural changes within the process and automates the interaction between the supplier and your ERP/Finance system.
5. Create an understanding of your internal capabilities
Whether you want to insource or outsource, my suggestion is to do your homework and don't select a business automation partner that promises the world.
At Datatime, our automation processes utilises the latest technology including (optical character recognition) software which is fantastic and greatly reduces the effort in capturing the data. However, there will always be a requirement to validate data within the process.
The validation process might be against business rules of a particular field or a predefined data set such as a product list. If the software cannot recognise the information a person needs to validate the character or field. The OCR software has a threshold that determines what it accepts and what it doesn’t know or understand. It can be set a 0% which means everything character needs to be validated so what’s the point of the software, all the way through to 100% where it accepts every character which means you will be importing incorrect data!!
The threshold is quite a detailed area and I might speak about this in more detail later, but the important point is you as the customer need to be confident in the quality and accuracy of the data you receive and that will be imported into your Finance system, ‘garbage in garbage out’!
To summarise, there are many benefits, the finance team can offer to their business and also trading partners. While EDI and these benefits may not be top of mind, I see the smart businesses taking advantage of these and then using the benefits including additional free resources to gain a competitive advantage. At Datatime we have developed and refined an ROI calculator to give a business an idea of the potential in this area. We are always happy to offer and vice on the potential of what any business may want to try.
Images: Deposit Photos
Duncan McKenzie – Senior Project Manager, WilldooIT (previously General Manager, Datatime Services)
Over the last 20 years Duncan has helped businesses create efficiencies and improvements using data capture, imaging and workflow (Business Process Outsourcing BPO).
With over a decade of project management, Duncan endures to ensure that of every one of his clients gains full value in the delivery of web based imaging and workflow solutions, assisting with the management of all phase’s from project delivery including planning, scheduling, budgeting, resource management, risk management, team leadership and implementation.