With the global emphasis on cost saving and leveraging detailed insight to drive efficiency, financial departments have had a key role to play in achieving effective management during the past two years. But how many organisations have turned the spotlight on finance? And, as a result, how many finance teams are still running highly inefficient processes?
Too many are still reliant on print, photocopy, post and manual filing of paper documents. Yet electronic creation, delivery, authorisation, store, management and processing of financial documents can reduce manually-intensive administration whilst significantly cutting costs, freeing-up filing cabinet space and supporting environmental policies.
By tightly integrating document management technologies with financial systems, organisations can transform finance team effectiveness, impose far greater control and, typically, achieve ROI within six months.
Transforming Business Efficiency
Over the past few years, organisations have focused attention heavily on cutting costs. And with many looking for innovative ways of improving productivity without the need to increase headcount, especially as the economy improves, the finance team has played an important part in coordinating cost containment activity, improving management insight and transforming expenditure models.
Yet finance remains a significant cost centre. In far too many organisations, finance is inherently inefficient. Processes are manual and disjointed, and key information resources are not integrated. Organisations are still reliant upon paper based records, adding cost, inefficiency and risk to day to day operations.
At the most basic level, storage of paper based information is both expensive and inefficient. Businesses do not have the space to retain paper documents on site, but once it is archived off-site it is extremely difficult and time consuming to gain access to the information if required.
And it is also a high risk approach. As too many companies have unfortunately discovered, paper records are at risk of flooding, fire, theft or loss in transit to a third party archive, risking compromise of both corporate intellectual property and personal details as well as breach of the Data Protection Act (DPA).
Given the efficient way most businesses are now able to share information, it is extraordinary that finance continues to re-key data between systems. In addition to duplicating effort, and hence adding cost, rekeying significantly adds the risk of errors which then complicates the reconciliation process.
Take purchase invoices as an example. Each purchase order is manually raised, and includes a record of supplier details, goods and amount. Yet when the invoice is received, much of this data is re-keyed into another system.
As a result, the process of keeping track of the status of each purchase invoice in the authorisation process is time consuming and unreliable. Original documents are sent to departmental heads for approval – and many are never received back. Indeed, invoices are often not registered into the finance system.
The result? The finance team spends far too much time answering queries both internally and from suppliers querying the status of their invoices in the payment process – a process that takes time trawling through multiple, disparate systems. Just exactly what value is any of this activity adding to the business?
Refocus on Finance
Of course, finance has had other objectives in recent years and has undoubtedly spent time looking at other ways to cut costs and become more efficient without making additional investment. But given the widespread availability of document management technology, why has finance not adopted this before?
Over the past decade, the efficiency and effectiveness of departments across the business, from distribution to HR, marketing to customer service, have been transformed through the adoption of document management systems.
In many cases, the finance department has been excluded from these developments due to the relatively low volumes of documents being received/processed (such as purchase invoices, credit notes, letters, faxes, emails, contracts etc), in comparison to other business areas.
There is a widespread perception that it would not be cost effective to implement a document management system in the finance department to handle such low volume of documents.
But document volume is not the only issue. Organisations have failed to consider the efficiency gains, improved control and indirect cost savings that can be derived by implementing a document management system tightly integrated to the financials.
Nor have most companies taken into account the benefits document management can bring to compliance. As long as a robust back up process is in place, document management software enables key corporate documents to be automatically archived and stored for a specific time duration to meet compliance requirements.
Once stored electronically, there is no chance of documents ‘disappearing’ to hide fraud. The digital images cannot be amended, shredded or lost – either deliberately or accidentally – and can be retrieved very quickly by anyone with the appropriate security levels from any desktop.
Additionally, as access to confidential/sensitive documents is often based on varying levels of authorisation within an organisation, document management becomes a critical tool to ensure compliance, especially with Sarbanes Oxley. All leading document management systems will maintain comprehensive audit trails of the processing and history of a specific document, such as supplier invoice approval, from the day it was scanned into the system.
Yet with an integrated approach the potential for transforming efficiency and delivering improved control is enormous. For example, most organisations should aim to get 85% of all scanned invoices automatically coded and posted into financials. Payment information is then automatically passed back to the document management system.
So what benefits will this deliver? Firstly, once the initial scan is completed, documents are automatically routed via workflow to authorisers for approval with no manual intervention, thus drastically reducing the administrative overhead. Secondly, there is massively improved visibility and access to documents across the organisation.
The user cost to view and search for documents is drastically reduced, especially in comparison to the license for an ERP/finance system user; while enquiries on invoice status can be simply and quickly resolved.
This visibility also has an implication for improved audit control. Authorisation processes are clearly visible; while auditors can be provided with rapid access to the archive at audit time, saving time for the finance staff.
As the dust begins to settle on some major structural and operational changes across the organisation, finance now has the time to consider its own processes. The adoption of document management tools can without doubt deliver significant financial savings.
The reduction in manual intervention and streamlined authorisation will enable finance to focus attention just on exceptions. This will enable staff overheads to be cut, as well as reducing time spent answering queries, searching for invoices and tracking authorisation across the organisation.
And the integration of document management with financials can also add greater control and improve compliance, whilst also reducing risk – as long as effective off-site backups are in place, organisations are no longer exposed to the danger of off-site storage disaster with the paper archive. With every finance document located in one place and every process streamlined and integrated, information can be rapidly searched and retrieved to address queries and quickly audited, further driving down compliance costs.
Finance has played a key role in supporting the business over the past few years. As organisations start to look for new growth opportunities, now is the time for the spotlight to turn to finance, to squeeze greater value from the department through greater efficiencies and far better financial control.