Whenever I visit a company, I always notice when I pass the financial department.
Desks are enclosed by bulging file cabinets and are buried under the files. In addition, I often feel an atmosphere of stress and heavy work pressure. Although there obviously is hard work going on, I still subconsciously feel they don’t have their business quite under control. Last week, when I managed to locate an employee in one of those dark caves of the financial Department, I asked him why they have to work in these circumstances. This is his answer:
“It’s because of the budget holders.
It takes them far too long to approve the invoices of our suppliers. Many invoices are lost or remain in trays until the suppliers inquire about late payments. Looking up the status of an invoice time after time, while hanging on the phone, takes a long time and only increases the level of stress on the department. I didn’t mention closing periods, reconciliations, VAT settlements, payment rounds, and all the managers who want to know how much they have left on their budget. There seems no end to this. It seems everyone does its best and yet we make no progress?”
“Finance is still living in the 1900’s
Later, during the meeting, I confronted a project leader with this. This was his reaction: They expect me to sit in my office in HQ every day, waiting until an invoice needs approval. Before I can do this, I need confirmation from a number of colleagues in the field about delivery, numbers, quality, price etc. In reality, these people are seldom in the office. Next I have to physically sign a paper invoice and sent it back via internal mail. Mostly I receive all of these invoices by the end of the month and they want them back yesterday because they have to report about their budgets. The problem is that I also spent only half a day a week at the office. Meanwhile suppliers complain about late payments. When I ask finance to clarify this, they send me a two weeks outdated report.
Why can’t these invoices pass through an automated accounts payable invoice approval flow?
Preferably with a web- or mobile application? On my smartphone or tablet? We are living in 2016, yes? This would seriously accelerate the accounts payable invoice approval flow and my suppliers would be paid on time. Why can’t I access data that is related to my suppliers myself? Why can’t I consult my spent against budget online? It’s about time, finance gets its business in order. This is damaging my business.”
First point on the agenda of the monthly meeting with the CFO will be the question if it wouldn’t be possible to digitalize the accounts payable invoice approval flow. He will start looking for an, at first sight, obvious solution. Independent software systems, that aren’t integrated with the general ledger. One to digitalize the invoices and a separate one for the accounts payable invoice approval flow. Did they make a thorough analysis of the problem first?
Imagine, we could bring the approval earlier in the process? Imagine budget holders would approve purchase orders instead of invoices?
The result would be that all are correctly made up invoices, match perfectly with the approved purchase orders and consequently can be booked fully automatically (without human intervention) on the correct accounts in both the general and the analytical ledgers and payments are prepared on or even before due date.
In the future only the fall out needs to be treated. During this process, you educate the suppliers to make their invoices correct.
The platform of the finance department is a haven of peace. You can feel everything is under control. There are plants were the file cabinets used to be, bulging filing trays are replaced by holiday photos. People enjoy their work because they no longer have to serve unhappy colleagues and suppliers and nobody has to do boring repetitive tasks anymore.
Music of the future? No, this is wat Raposa realizes together with their clients today: the optimization and automation of the processes of financial departments from service- and project oriented companies. Do you want to know more? Have a look at www.racs.be .