Manual paper systems have been at the core of accounts payable processes for a long time. However, paper systems are becoming less sustainable. As invoices increase, the manual workload for reviewing the data grows, and records become more difficult to manage. Thus, a paperless accounts payable process is necessary.
Accounts payable workers can endure long working hours as a result of paper processes. Adapting to a paperless accounts payable process could solve many of the potential hidden issues in the department whether it’s duplicate payments, misplaced data, or trying to mitigate increased fraud and compliance risks.
The most practical and modern solution is to phase out paper and switch to a digital and automated solution. Continue reading to learn why going paperless can optimize your reviewing of invoices and support continued success. In addition, you’ll receive some key steps to help you start implementing a paperless accounts payable process sooner rather than later.
The Problem with Paper and Manual AP Systems
Paper is very familiar and handling invoices manually may help you feel like you’re on top of the job. Yet, this manual process can lead to a false sense of control and higher accounts of human error when managing invoices. According to a study conducted by the Accounts Payable Association, 54% of respondents say invoices were sent to the wrong place. Meanwhile, 35% were concerned about late payments due to process delays.
As vendor relationships and other payment types available continue to grow, time becomes an even more important resource. Handling paper receipts, ledgers, invoices, and checks can eat up precious time and energy. Misplacing an important document or incorrectly entering a payment or invoice number is a common occurrence that easily increases with program growth. Not to mention, continuing to store and categorize all the paper and data somewhere in the office is another tiresome but inevitable challenge in a paper-centric process.
The Benefits of a Paperless Accounts Payable Process
If your organization is looking to streamline processes, reduce costs, and boost efficiency, you’ll benefit most by transitioning to paperless AP processes. Going paperless can save you time and energy when it comes to looking for documents and organizing them. Instead, you can just search for them after they’ve been digitized. Below are some additional key benefits to look forward to:
- Avoid duplicate payments from the AP side as well as with credit cards
- Keep up with invoices more efficiently and know exactly when invoices have been paid to avoid sending suppliers money twice
- Less paper will free up office supplies and resources such as printer ink, storage and filing equipment, computer paper, and more
- Improve communication and visibility of spend data between the AP and Procurement departments
Purchasing Cards or P-Cards can certainly be part of your paperless system as well. If more departments are spending money on various expenses for the organization, having a P-Card program creates a paper trail to help you monitor where money is going and who the top suppliers are. This data is crucial for departments and helps shift your focus from gathering the data, to assessing and leveraging it appropriately.
If your AP department is also processing and reviewing payments for small dollar amounts, you could start to put these purchases on P-Card or Travel Cards to reduce your fees.
How to Implement a Paperless Accounts Payable Process
Establishing a paperless accounts payable system is easier when you break up the process into attainable action steps. Here are some key steps your organization can follow to get started.
Assess Your Starting Point and Commit
First, commit to going paperless. That way, there is nowhere to move but forward. If you’ve been thinking about making the switch for some time now, imagine how accomplished your department will feel when all the changes have been made and you have a new and improved system.
Then, assess the current situation including where your process is right now.
Where do the current workflows stand?
How can they be improved?
Are there too many methods for receiving customer invoices?
What data are you looking to gather?
Try to get as specific as possible about areas you’d like to fix. This includes features you’d appreciate once a paperless accounts payable system is in place.
If your team finds that you’re spending a substantial amount of money processing payments or that invoices are being paid later than expected, start imagining how this process can be digitized or possibly even automated.
Delegate and Involve the Team
Once you know your starting point, lighten the workload by involving the entire team and divvying up tasks. One person can be in charge of capturing invoice data while another can work to establish a preferred digital payment method with suppliers for future invoices.
Develop a chain of command where one person can categorize paper invoices (based on what’s been submitted, verified delivery of goods, and invoices waiting to be paid by an approver) and another can serve as a second set of eyes to check to make sure nothing was missed.
Start Digitizing and Set a Firm Deadline
Next, it’s time to start digitizing. This is the part that most people don’t want to think about but it doesn’t have to be as overwhelming as you’d think. If you were able to take care of the previous step and sort all your paper documents, scanning everything to a digital format should be pretty standard.
It helps to set a deadline for digitizing your documents. That way, the department will know there’s a clear end date for this step of the process. As a result, it won’t be dragged out for several weeks or months.
Digitizing can look differently depending on your goals. For example, it could involve moving some of your smaller purchases to P-Cards or Travel Cards. This would help make these payments more traceable and even lower some of your processing fees.
Prevent Duplicate Payments By Establishing Fraud Detection
To reap the full benefits of establishing a paperless accounts payable system, you’ll need to make sure there are adequate controls in place to protect against fraud. Duplicate payments are, unfortunately, a common type of fraud within AP departments.
This could occur if a cybercriminal gains access to your supplier’s account and requests payment but routes it to another account. Internal billing schemes, such as if an employee were to set up a shell company to generate false invoices and cut checks are also a common fraud tactic.
Additionally, reimbursement fraud can occur among employees holding Travel Cards or P-Cards whether they are paying for meals, submitting non-qualifying travel expenses, or overstating expenses.
In many other cases, duplicate payments are a result of admin errors or oversight. This could be due to a lack of time, resources, an increasing number of invoices to review and process.
Or, the duplicate payments can start due to a lack of visibility into vendor payments. Vendors could end up paying once on a credit card and again with an invoice for the same purchase. Look to a third-party resource like Card Integrity to help detect duplicate invoices and payments within the AP department and across other purchase methods as well. Card Integrity uses a proven system to help track down duplicates including contact information, in-depth invoice information, refund methods, patterns, and more.
Aggregate the Data For Increased Visibility
A paperless accounts payable process will make valuable purchasing data more accessible. By moving everything to the digital realm, you’ll gain more data insights to help meet goals such as:
- Reducing the cost of processing payments
- Improving vendor relationships
- Consolidating payment methods
- Increasing the number of on-time payments
- And more
This data can also be used to improve communication and visibility between Accounts Payable and other departments like Procurement. With increased real-time data, AP and Procurement can work closely to optimize cash flow management, improve supplier performance, and possibly even increase discounts for early payments to suppliers.
Data aggregation is key in establishing a pathway to improving internal communications and reaching these goals. Card Integrity provides an expert solution to the various forms of data you may be facing even after going paperless. Instead of reviewing a sample of P-Card spend or invoices, we review 100% of these transactions and provide a clear financial overview. Additionally, our reports point out key red flags while taking a deep dive into payment methods, vendor types, overpayments, refunds, and more.
Streamline Workflow and Meet More Goals With a Paperless Accounts Payable Process
A completely paperless accounts payable system allows the AP team to better track invoices and payments by increasing visibility and transparency. As an added bonus, you’ll reduce costs and human error while gaining data insights to help reach key goals. Remember that strengthening your internal fraud controls as well as moving some expenses to P-Cards or Travel Cards can contribute to your efforts of streamlining processes by going digital.
Allow Card Integrity to help you check this task off your to-do list this year with our comprehensive Invoice Review service. The Invoice Review service helps sift through 100% of your transactions while looking for high-risk duplicates. When dealing with money and payments, there’s always an opportunity for fraud to occur as well as innocent process missteps.
Given that 2% of an organization’s annual spend includes duplicate payments, Invoice Review will restore confidence in your team knowing that all transactional data is carefully monitored across various payment methods according to your policies and procedures.
Book a free demo to see your internal processes improve firsthand and get started today!