Like many professions, accounts payable employees are working at home these days.
Ninety-one percent of accounts payable departments work from home, at least in part, according to the results of a poll conducted during a virtual town hall meeting held by the Institute of Finance and Management (IOFM). It is uncertain when accounts payable teams will return to the office.
Until recently, the conventional wisdom had been that working in an office was critical to payables productivity. The paper-based processes and on-premise systems that most accounts payable departments relied on to process and post invoices also were not conducive to remote working.
But shelter-in-place mandates required Americans to work from home. During the pandemic, accounts payable departments were forced to adopt new ways of receiving, processing, and posting invoices, and paying suppliers. The results have been better than imagined for many departments.
Eighty percent of workers surveyed by McKinsey enjoy working from home. Forty-one percent say that they are more productive than they had been before, and 28 percent say they are as productive. Many employees liberated from long commutes and travel have found more productive ways to spend that time, enjoyed greater flexibility in balancing their personal and professional lives, and decided that they prefer to work from home rather than the office. Many organizations think they can access new pools of talent with fewer locational constraints, adopt innovative processes to boost productivity, create an even stronger culture, and significantly reduce real-estate costs.
None of this is to suggest that remote working arrangements are without challenges.
Accounts payables leaders admit that they are concerned about the way they are doing things in today’s remote working environment. Many payables leaders are reporting new fraud and compliance risks, more difficulty in getting suppliers paid on-time, a spike in the number of inquiries from suppliers regarding payment status, and less visibility into cash.
With businesses unlikely to abandon remote working arrangements, payables leaders must find ways to balance the satisfaction people experience working from home with productivity and security.
Three steps to reimagine how accounts payable works
Now is the time to question long-held assumptions about how accounts payable should be done.
Payables departments must think long-term. The following steps will help payables leaders further adapt their department so that they can thrive, not survive, no matter where their employees work.
1. Reengineer existing processes and procedures.
During the pandemic, organizations had to ensure that the most important processes could be completed remotely. Most simply ‘lifted and shifted’ existing processes to remote work environments, mimicking what had been done before the pandemic. This may have worked fine in the short-term, but it is a barrier to long-term operational improvements. Accounts payable departments should take a hard look at their processes for receiving, processing, and posting invoices to identify those that should be scrapped, reworked, or automated. Previously, for example, departments may have relied on back-and-forth e-mails and phone calls to resolve exceptions. A new process may leverage automated e-mails to suppliers requesting them to provide missing or corrected information. For most departments, there are countless other processes that could be reconstructed and strengthened so that the organization achieves and sustains the performance that it seeks.
2. Digitize processes to support remote working.
We all know the problems with manual, outdated invoice processes: high costs, lots of errors, slow cycle times, inadequate visibility, and poor supplier relationships. Few accounts payable departments process invoices in a fully automated manner with few or no manual tasks. Digitization will need to be prioritized for working from home. Suppliers can be effortlessly onboarded through an online portal. Digital mailrooms can receive invoices in any format, including e-mail, a supplier portal, and File Transfer Protocol (FTP) upload. Intelligent data capture can extract and validate invoice data and match it against purchase orders and proof-of-delivery receipts. Dynamic workflows can route invoices based on pre-configured business rules. Notifications can be automatically sent to suppliers to supply missing or incorrect invoice data. Advanced analytics can provide insights into the status of invoices as well as the corporation’s financial health. To maintain productivity and facilitate collaboration over the long haul, accounts payable departments must automate their outdated, manual processes. Approving invoices can no longer involve employees keying data and shuffling paper, with no time to spare for value-added activities. Digitization will shift from a “nice to have” to a “must have.”
3. Rethink the role of accounts payable staff.
A transformational approach to how accounts payable staff spends their time will be necessary in the new reality. Businesses will need cashflow insights from accounts payable to navigate the turbulent economy. To unlock the full potential of their department, accounts payable leaders should take a fresh look at how much manual work is required of their people and look for ways to refocus them on higher-value activities such as data analysis, supplier management, and vendor master cleanup. That kind of approach will help the business move closer to its strategic objectives, while raising the standing of accounts payable in the eyes of sought-after talent, particularly millennials. Some departments may find that their employees are less likely to leave for other jobs.
These strategies may not only improve how work is done but also lead to savings. Paper processes and the associated keying, paper shuffling, and error resolution make accounts payable the most labor-intensive finance and accounting function, the Institute of Finance and Management reports.
In a digital remote working environment, the potential to reduce invoice processing costs could be significant. Simply scanning invoices into an e-mail box will not be enough. Accounts payable leaders should leverage digital technologies to redo the invoice processing lifecycle entirely.
Now is the time to rethink the way accounts payable operates, and its underlying cost structure.
Accounts payable leaders can use the lessons they have learned while working remotely to reinvent the function and create sustainable process improvements. That kind of change will require better business processes, digital technologies, and the refocusing of staff on higher-value activities.
IPS stands ready to help.
Our accounts payable automation solution was built for remote working.
Contact us to arrange a no-obligation consultation with one of our experts!