Has Covid-19 helped digitise finance departments?

From all the negativity 2020 has brought with it for finance departments, one silver lining could be the rapid and immediate digitalisation of financial functions, argues Magali Michel, Director at Yooz.

The issue of paper statements and invoices stuffed into cardboard boxes in the corner of the office has dogged traditional, or old-fashioned, finance departments for years.

But the complete digital transformation of finance processes almost happened overnight as people made their way out of the office to begin working from home during the start of the pandemic lockdown.

Cloud technology was adopted to enable employees to efficiently work from home, and apps such as Slack and Zoom were downloaded to keep communication channels flowing.

And, as people found themselves working longer hours at home, the new working environment opened up the conversation yet again about automation in the finance process.

Almost two-thirds of CFOs say that standardising and automating processes will be a significant priority for tomorrow’s finance function, but what exactly does this look like?

The disadvantages of having a manual AP process

The first problem to mention is that UK legislation, such as Making Tax Digital, stipulates that you must digitalise parts of your financial process. 

This is a growing trend, so if you still have a manual process for your AP, you are at serious risk of failing to comply. 

Beyond that, manual processes are lengthy and prone to error, be that from miscalculations or other issues. 

It might seem a little tedious, but storage can be a challenge in the UK where companies are required by law to keep invoices on record for up to six years. 

That challenge is met by keeping them securely in the cloud instead, avoiding the need to store huge volumes of paper invoices in filing cabinets. Your audit trail may also be less secure and clear if you still rely on a manual process. 

Clients and suppliers are likely to demand digitalisation, so you risk falling behind the competition if you are still using manual processes. Perhaps most of all, manual processes are time-consuming - and time cost equates to money lost.

What are the benefits of AP automation?

Companies will be able to access real-time monitoring of the entire invoice process - from budget to payments from any device, giving greater control, visibility and transparency. 

Again, digitalisation is being encouraged by several regulatory bodies now, and that trend will only continue, so automation will ensure compliance both now and in the future.

However, compliance is not the whole picture. Automation ensures your documents will be securely stored, and the system, built on machine learning, can detect frauds and errors which manual processing would perhaps miss. 

Digitalising AP processes means you are no longer exposed to manual errors when entering invoices onto the system, which can include duplication and miscalculations. 

Automated processes also promise to reduce processing time and costs by around 80% - a significant amount at any time, never mind during a recession. 

Staff are therefore freed to spend more time on high value, meaningful work once they are no longer caught up with repetitive and manual administrative tasks.

How do businesses flip the switch from manual processes?

Just like switching from a manual to an automatic car, making the move to automated processes can seem daunting for those that have stuck with traditional processes for so long.

The good news is that the switch can be done in days rather than weeks or months.

Automated accounts payable tools are typically compatible with hundreds of ERP systems and different types of accounting software. New connectors and APIs are built every day, so there’s no real need to change existing programmes. 

Novotel was one example which went through this process after purchasing a new hotel where the AP process was a traditional, manual one. 

The hotel company was able to implement an automated AP process after one hour’s training, with the digital process fully operational in the new hotel after just 15 days, processing around 2,000 invoices per month.

Going...going...gone (digital)!

According to Gartner, the term “digital” in the early 2000s only ranked among the Top 5 priorities for CEOs in 2.1% of the companies surveyed, whereas today it is a priority for one out of every five companies. 

A wave of change has hit UK businesses this year, changes which are sure to have knock-on effects well into the future. Prepare with the right technology now to gain the competitive advantages sooner rather than later.