The traditional process of manual invoices, where accountants endlessly document and detail slips of paper which indicate payment, is slow, inefficient, and harms small businesses everywhere. Businesses delay paying their suppliers as long as possible to hold onto cash, and suppliers are often reluctant to press for payment as they fear annoying their customers. According to The Guardian, a 2014 survey of small and medium British businesses found that they “currently face up to £40bn in unpaid invoices,” which amounts to an average of £38,186 per firm. Similar problems exist in the U.S. as well.
Businesses should pay promptly not just because it is the ethical thing to do, but because it creates good relationships with their suppliers who will sometimes offer discounts for early payment. Unfortunately, even businesses who are sincere about paying can be delayed by invoice errors and problems in the process.
Automated payment technology often known as financial process automation (FPA) is the answer to these problems. Many of us already automatically pay our utility bills or insurance monthly, and businesses should try to do the same thing with the bills they have to pay. Combine fast payments with automation technology which lets accountants become advisors, and the result will be a net benefit for everyone.
The Importance of Automated Payments
The general benefits of using FPA is that invoices become less expensive and easier to process since they are no longer being done by hand. In a system where manual invoices take time to process, businesses cannot get a real-time perspective on their financial situation. A small business may see that they have $30,000 in funds, but how much of that is needed to deal with upcoming payments?
The problem in that scenario is a lack of information, which is precisely what FPA can provide. And since small businesses can have an easy way to view how much they are paying suppliers, it makes it easier to make decisions and ensure regulatory compliance. And with FPA, the data becomes centralized and interconnected instead of spread out on countless invoices and Excel spreadsheets.
Your business will win through a faster, cheaper invoice process which gives businesses more information. Your suppliers will win because they know that they will get paid on time which will foster good relations and ethical behavior.
Best of all, this will remove a great deal of stress from your office employees. A lot of HR departments employ anti-stress measures in the work place, such as light exercise or going for a walk. This can clear your mind and release stress ready for when you start work again. However, with automated invoicing, stress itself need not be a problem.
Digital and Manual Labor
A business may look at automated payments and dream of a system where everything becomes automated. But FPA alone cannot fulfill that dream. Accountants still find themselves trapped under piles of menial work like data entry, which take up hours and prevent them from fulfilling their true potential.
The solution to this is digital labor, otherwise known as robotic process automation (RPA). A 2016 survey from PwC found that 57 percent of financial service companies have done one or more proof of concepts in regards to RPA, with an additional 17 percent further along in the process. From an accounting perspective, RPA essentially fulfills the task of human workers, capturing and connecting data from one program to another.
Cloud technology has already made it so that accountants can have all accounts on a centralized, easily accessible ledger instead of multiple ledgers on multiple computers. RPA takes this a step further by reconciling data between different systems. While a workers before may have to take an Excel spreadsheet and retype all the data into another system, now RPA can do this. This saves accountants thousands of man hours and is a major benefit for the business.
We Will Not Be Replaced
Everything listed above should make it clear how businesses can benefit from an automated payment system. But some accountants worry that robots and automated payments will end up replacing them and so may be reluctant to recommend adapting the process.
These fears are unfounded. The reality is that accountants are overworked, especially during the busy tax season. This results in mental illness as Going Concern points out, as well as countless young bright accountants leaving the profession to go into a less stressful field. Accountants need less work, not more, and technology removing that work is a good thing.
Furthermore, while RPA and FPA handle grunt work like data entry and processing invoices, accountants are free to use their judgment to become financial advisors and use their unique insights to actually help the company. These technologies will complement accountants, not replace them.
Instead of fearing how automation could cause accountants to lose their jobs, accountants should embrace these new changes and take on a new role where they are creative producers of insight and not just rote data entry grunts. By accepting these new technologies and letting automation handle payment and data entry, the end result will be good for everyone, whether we are talking about accountants, businesses, or suppliers.