After three months of a whirlwind of activities adjusting to the operational disruption caused by the COVID-19 pandemic, most accounts payable departments have settled into an operational rhythm.
Now the hard part begins.
Accounts payable departments must rethink the way they operate and their underlying cost structure.
Tired approaches to processing invoices cannot meet the challenges created by COVID-19:
- New ways of working
- Mounting pressure to reduce costs
- Ever-increasing demands from leadership for real-time access to cash and spend data
- Greater risk of fraud and compliance issues
Surviving and succeeding in this new normal requires accounts payable departments to modernize.
Only 9 percent of accounts payable departments describe their operations as being fully automated, with few or no manual tasks. That is according to the results of a poll conducted during a recent virtual town hall meeting organized by the Institute of Finance and Management (IOFM) and sponsored in part by Data Dimensions. Click here to access an on-demand recording. Thirty-three percent of accounts payable departments admit that their department is not very automated.
The lack of accounts payable automation exacerbated the challenges created by COVID-19.
- An eye-popping 90 percent of accounts payable departments are working from home. Fifty-seven percent of departments are entirely remote. Adapting paper-based processes to remote working arrangements is a tall order. But the 33 percent of accounts payable departments that rely on on-premise invoice processing systems likely found the transition hard as well.
- One-third of accounts payable leaders surveyed by IOFM say their team is working longer hours since the onset of COVID-19. Eight percent of accounts payable pros are working an additional two hours or more per day since the start of the pandemic – a sobering statistic when you consider that most accounts payable pros worked long days before the pandemic. A lot of this time is likely spent chasing down information and coworkers. That is time that could be better spent on high-value activities that could help the business return to growth.
- Fifty-nine percent of accounts payable leaders say their department has missed at least one invoice due date because of operational disruption caused by the pandemic, IOFM finds. Missing a deadline during the initial transition to a remote work environment is one thing. But many organizations are struggling to adapt paper-based and semi-automated invoice approval processes. Timely payment helps businesses avoid supply chain disruptions.
With COVID-19 shining a bright light on the shortcomings of traditional approaches to processing invoices, automation has become a priority for more accounts payable departments. Seventy-one percent of accounts payable departments – ranging from departments with little or no automation to those with lots of automation – plan to deploy more technology within the next year, IOFM finds.
Some may argue that now is the time to hoard cash and not invest in automation. While liquidity is critical for navigating a crisis, accounts payable automation can return 10 times the benefit for each dollar invested, in terms of improvements in productivity, working capital and risk avoidance.
Successfully transitioning to new ways of working during the pandemic may be a relief. But it is not a time to sit back. Modernizing accounts payable will give organizations an edge during the post-pandemic recovery. To learn more, contact Data Dimensions to arrange a no-obligation consultation.