Paper-based accounting processes are cause for concern. In some businesses, they are debilitating.
Now, more than ever, executives are wondering what technologies make the most sense in a digital business strategy, and when it comes to streamlining accounting processes, document management software is an essential component of that strategy.
Implementing document management software in accounting has numerous benefits for the department as well as the entire organization.
Defining “Documents” In An Accounting Setting
The term “document” within an accounting department stands for any form of structured information involved in accounting transactions, such as purchase orders, invoices, checks and more.
In discussing accounting-specific documents, it’s important to point out the difference between input and output documents. An input document initiates the accounting transaction, while an output document is generated by the accounting system.
Through the use of document management software, input and output documents may be digitized for streamlined internal and external workflows – for the business itself and its customers.
Why The Need For Document Management In Accounting?
In every paper-based accounting department, there’s a process waiting to be digitized through the use of electronic documents and digital workflows.
Without electronic documents, accounting departments suffer from:
- Unproductive employees
- Duplicated work and manual entry errors
- Poor collaboration between departments
- Bottlenecks in accounting and other departments
- Lack of streamlined, transparent processes for review and approval
- Limited ability to take advantage of early payment discounts
On the other hand, accounting departments using document management software alongside accounting software benefit from:
- Linked accounting and related company documents
- Extended ability to resolve customer and business inquiries
- Enhanced electronic audit trail
- Reduced (or completely removed) paper storage
- Increased accounting process efficiencies including streamlined review and approval
- Improved ability to benefit from early payment discounts and control cash flow
So, why is it that paper accounting documents are still manually keyed into the system instead of being received, scanned and stored electronically?
Where Electronic Document Management Fits Best In Accounting
The accounts payable portion of your accounting department is the best candidate for optimization using document management software.
In the case of one particular manufacturing company, document management technology was used to create a digital process for acquiring and approving invoices. After integrating document management with accounting software, executives were able to point out bottlenecks where invoices were endlessly stuck in reconciliation with the purchasing department.
Document management also helped by allowing matching purchase orders and invoices to be passed through to approval, while the ones that did not match would need to be viewed individually by an employee.
By implementing document management software first in accounts receivable, the organization was able to experience the benefits of eliminating unnecessary payments and increasing cash flow before scaling the software to other areas of the organization.
The Beginning Of Optimized Accounting Efficiencies
Eliminating paper-based processes in accounting through the use of document management technology adds a new level of insight to your entire organization.
By implementing document management software in accounting, businesses breathe new life into the departments through reengineered processes, reduced headcount and increased opportunity for new roles, as well as quality contributions to the rest of the business.
How can your accounting department take the lead in your company's digital transformation? Read our free guide: 5 Trends That Will Shape Finance in 2018 to learn more.