Enterprise content management can help transform mediocre, manual and error-prone accounting processes into automated and efficient ones. In addition to immediate cost savings within the accounting department, this transformation will also have benefits beyond the finance department. Ultimately, pursuing accounting process automation through enterprise content management can position the CFO and finance executives as leaders in a key C-suite objective – business process transformation.
The Aberdeen Group recently surveyed more than 180 organizations to assess the performance of financial operations. In the area of accounts payable (AP), the gap between the top 20 percent of those surveyed and the bottom 30 percent is remarkable:
|Laggard organizations (bottom 30%)…||Best-in-class organizations (top 20%)…|
In a paper-based accounting system, processing, retrieving and storing important documentation takes up storage space and employee time. And when you have an accountant spending lots of time filing, receiving and storing documents, that’s a poor use of their skills and your company’s resources.
When you use ECM to improve efficiency in your accounting department, the cost savings add up over the course of a year. For instance, take a company with an annual purchasing volume of $10 million, if an enterprise content management system helped shave off one percent of that cost by reducing lag time and overpayments and capture early payment discounts, that one percent adds up to $100,000 every year.
Enterprise content management offers your accounting department a great way to reduce document storage and processing costs. And since an enterprise content management system puts any kind of supporting documents at your fingertips, it also improves efficiency across the entire organization, positioning the finance department as a leader in the drive to “digitize” the entire business.
The American Productivity and Quality Center notes that “36% of organizations say their financial processes are misaligned with the pace and needs of their unfolding business strategy.” This means that poor financial processes not only impact financial operations, but have a negative “ripple” impact throughout the organization.
Financial processes are unique in that the information and documents that are created by and surround financial processes are used in countless other processes and departments, including sales and customer service. APQC notes, “Most companies are losing as much as 1% of sales due to poor planning and decision making. Why? Business decision makers misinterpret or discard financial analysis.” Organizations with poor financial processes typically have an error rate of 3.3% in their sales forecasts, compared to 1.5% at leading-edge organizations.
Financial process transformation has an important and growing multiplier impact throughout the organization. Finance is the glue – in both a good and bad sense! – that either connects or confounds the rest of the organization. Once their own house is in order, automating accounting processes establishes Finance and CFOs as potential leaders in the effort to automate and transform other departments.
Editor's note: This post was originally published in November 2014 and has been updated for accuracy and comprehensiveness.