A lot of companies waste money on products that they should never have ordered. Even when an order is authorized and the right product arrives from the vendor, it’s still possible to waste money through errors and inefficiencies in invoice management.Is your company at risk for these three accounts payable (AP) disasters?
- Paying an invoice for an unauthorized purchase: If your AP accounting processes aren’t as rigorous as they should be, you’re likely to pay for products and services ordered by employees who weren’t authorized to make the purchase.
A document management system improves transparency and streamlines invoice management and approvals. For instance, your system could use business rules to make sure that no purchase orders go out until at least two people have reviewed and approved it. One approver’s task might be to look at the product-specific issues, such as price points and specifications, while another person approves the payment from a financial perspective.
And with the digital workflow capabilities in document management systems, you have the option to build in additional safeguards, such as requiring that invoices above a certain dollar amount receive even an additional approval from a department head. - Overpaying due to errors and slow accounting processes: Two disasters associated with paying invoices are not paying the right amount and overpaying because the payment didn’t go out fast enough. To make sure the invoice you’re paying shows the right amount, the AP team needs to match the price on the invoice with the amount on the purchase or requisition order.
The concept is simple, but the process is often needlessly time-consuming, especially in a paper-based accounting department. And when time is short, people cut corners on invoice management, which frequently results in overpayment.
Fortunately, a digital document management system (sometimes called “enterprise content management” or “ECM”) makes this match fast and painless for your AP team. The vendor invoice, purchase order and all other relevant documents are stored in a central document repository, allowing you to match the amounts in seconds from your computer, without having to leave your desk. In addition, the streamlined invoice management and approval process ensures you don’t miss out on capturing early payment discounts. - Inaccessible accounting documents: What happens if you need to find an invoice, and the document has been destroyed or misplaced? Having all of your AP invoices available is important for ensuring compliance and business continuity in the event of a natural disaster or other data breach.
Good invoice management is essential in terms of compliance, because the Internal Revenue Service is always looking at companies to make sure they aren’t using faked invoices to overstate or understate their profits.
In terms of disaster recovery, it’s important to have your accounting documents backed up at another location, in case of a flood, fire, storm or cyber attack. A good document management solution should help to automate time-consuming compliance tasks and provide a reliable backup of your important business information.
If you’re concerned about unauthorized purchases, overpayment or losing access to your accounting documents, it might be time to consider reducing these risks by moving to an ECM or document management solution.
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