A typical day for Accounts Payable (AP) department involves processing purchase orders, invoices, and other bills the company needs to pay by the end of the month. For startups, handling all this paperwork manually is manageable. But manually driven processes can hold back AP departments, especially the ones in growing businesses.
Too many errors
The first and biggest problem with manual AP processes is the data entry. If your AP department relies on paper, a lot of time and resources are spent transferring data from invoices into the computer, leaving room for plenty of mistakes.
Anyone can misplace a decimal point, key the wrong amount, or mislabel an invoice. While there are staff responsible for catching these mistakes, errors can always slip through the cracks and they’re costly to correct.
In addition to error-prone data entry, manual invoice processes create bottlenecks. For instance, employees have to run around the office looking for the right managers, executives, and business owners to approve purchase orders and invoices, which results in delayed payments and penalties.
Meanwhile, processing mistakes lead to duplicate invoices being issued and billed. And if companies lose invoices, they will have to follow up with vendors for replacement invoices and do the approval process all over again. Problems like these can damage relationships with vendors and may even lead to them blocking your account entirely.
Tough to manage
Another major issue with paper-based AP processes is that they’re difficult to manage. Paper invoices tend to move around the office and tracking them is difficult. What’s more, accountants need to keep financial records at least seven years for auditing purposes, so you’ll need to have a dedicated space to store all AP-related documents. That means you need to purchase file cabinets (starting at around $250), install an archive room, and hire someone to manage and maintain documents.
As your business grows, retrieving documents also presents a logistical nightmare. Your employees will have to sift through file cabinets just to find the right one, and that’s assuming everything was filed perfectly. Studies found that the cost of finding misfiled documents is $120.
This is clearly not the best use of your employees’ time. That’s why you should streamline AP processes with cutting-edge document management systems (DMSs) like PaperSave.
Why AP departments need DMS
DMS makes AP processes simple. When paper documents are scanned into the system, DMS automatically indexes and stores them in a centralized cloud server that’s heavily guarded with the latest cyberdefenses and expert technicians.
To retrieve files, all you have to do is key in a search term related to the document, such as the company name, specific dates and amounts, and index number. And if you need to audit your invoices, DMS also comes with audit trail features that keep a record of who accessed certain documents and what changes were made.
Aside from the core features, you can speed up invoice processing even further by combining DMS with accounting software like Intacct and Dynamics GP. A feature called workflow automation allows you to route invoices and other documents to the correct managers as soon as they’re processed. You can even set automated reminders for AP managers to ensure outstanding invoices are paid promptly, so you can enjoy early payment discounts.
Time is the most valuable commodity for AP departments, and that’s what PaperSave DMS provides. Our DMS eliminates routine paperwork to help you save money and give accountants more time to focus on higher priority projects.
If you still think that manual, paper-based AP processes are superior, you need to read our FREE whitepaper: Why businesses should go paperless. You can also learn how PaperSave can solve your biggest AP problems by watching a personalized demo today.