Benefits Of Using Digital Workflows In Accounts Payable

By Thomas Schneck • August 27, 2015 at 5:07 PM

Regardless of industry, digital workflows may be used for a wide range of paperless processes, from simple to highly complex.Benefits of Digital Workflows

One of the most effective ways to use digital workflows is for accounts payable (AP) invoice processing. By switching from a manual approval process to an automated paperless workflow, your accounting department could easily reduce the total time it takes to process an invoice by 60 to 70 percent. This gives your company opportunities to take advantage of early payment discounts or use on-time payment to negotiate better prices with large suppliers.

Breaking Digital Workflows Down By Department

In a typical scenario, upon receiving a paper or electronic invoice, your accounting team must verify that the invoice contains all of the necessary information and that it matches a purchase order before sending payment. If accounting isn’t able to assign it to a purchase order, or there’s a mismatch in pricing, the invoice must be sent to the appropriate cost center managers for checking and approval. If your AP process doesn’t use a digital workflow, accounting routes the original invoice to approvers, at which point your accounting team loses control over the document.

That original invoice could sit on an approver’s desk for days or weeks, delaying the approval process. When the AP team remembers that there’s an invoice circulating, someone has to follow up with approvers to locate it and get an update on its status, which is extremely time-consuming.

Large organizations often have multi-step approval processes, in which certain people are authorized to approve invoices below a certain dollar amount — perhaps $5,000. Invoices for larger amounts may require a second or third approval before returning to the accounting department. Routing an invoice between multiple approvers makes it even harder for AP staff to track down the original document.

How Digital Workflows Create More Control

By adopting a digital workflow, the AP staff is able to retain control of invoicing while gaining a complete view into the approval process. But a digital workflow offers more than transparency for invoice processing. The workflow could also be set up to monitor deadlines and take action to keep the process on track. For example, the system could send automated notifications to approvers when they have an invoice to review. If they don’t respond within a certain time frame, the system could escalate the invoice by rerouting it to a person’s manager or supervisor, or returning it to accounting.

Digital workflows are highly effective in accounting, because the accounting processes follow a standardized set of steps that may be expressed in some combination of user tasks and unattended activities. When processes require greater flexibility, however, digital workflows may not be a good fit.

In a sales department, for example, the sales process often requires reps to be creative and flexible, adapting to a customer’s requests and requirements. In this situation, a digital workflow may not be a good option. Even so, digital document management does help to streamline the sales process by providing reps with fast, easy access to the information they need to make a sale, such as price lists, product specifications and collateral. This allows reps to generate quotes more quickly and answer customer questions while on the phone with them, instead of having to first retrieve paper documents from a file cabinet.

Using digital workflows for accounts payable could easily reduce the total time it takes to process an invoice by 60 to 70 percent.

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Topics: Workflow, Accounting and Finance

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