From virtual manufacturing breakthroughs to cybersecurity protocols, breakthrough technologies have no surprise become important for more industries in the business world than in past years.
Adapting to new technologies is an essential process for many companies to evolve, but when does it become necessary to implement them? At what point do you know when investing in new parts or processes steps away from an unnecessary expense and becomes a financial asset? This helpful tool for financial leaders will give you the clues to identify opportunities to enhance your company's financial portfolio and performance for a better return on investment. Let's review.
Use these 5 Indicators to Analyze AP and Financial Performance
Fortunately, assessing key financial opportunities for your company to act upon is a simpler process than it sounds. A little detective work on the input and output of invoices is all that's really needed to identify what needs to be done to achieve the desired results. Note that the resulting answer may not be the same for everyone since the relativity of company size, policy operations, and production output greatly varies in each financial outcome.
1. How Many Invoices are Received?
Tracking your total number of invoices is one of the most important starting points for diagnosing your company's status so you can see what the numbers are telling you. When have your peak production times happened before? Does it seem like your resources are now straining to keep up with you even though they once performed perfectly? If this sounds familiar, you may need to invest in newer equipment for your growing company.
2. The "Hourglass" Approach
"Time is money" may seem like it's a saying as old as the dinosaur age, but there's a good reason why we still have it around. Evaluate what the average time is for invoices to get approved, then work to reduce it. "Slowboat" invoices run the risk of literally becoming more expensive because you may be missing valuable discounts, or worse, incurring late fees. Always aim at getting 100 percent of your invoice discounts because even 80 percent of them can translate into a large cost depending on the size of your AP department.
3. Erroneous Payment Percentage
Not only are payment errors like duplicate payments a considerable problem for financial and tax records, they can be embarrassing and even damaging for business relationships. They are also notorious for costing your AP department time and energy to track them down when they could use those resources in forwarding movement. To manage these errors, assign a coding system for each type of error if you don't have one in place. An automatic payment system can also significantly reduce these costly mistakes and prevent payment fraud risks.
4. Take a Headcount
How many people does it take to complete an invoice? It depends on the company size and nature of the bill. As more business is done across international borders, it can get pretty complicated to process payments. For companies who make 100 to 5,000 payments each month on average, 29% of them have more than 10 employees in the AP department to get the ball rolling, and 29% more of them employ 6 to 10. If this sounds like your company, you can streamline this process by finding out what can be improved by talking to your strongest players and develop a strategy to conduct for the whole team. Increased automation for repetitive bookkeeping tasks can also help a great deal in simplifying payment processing so your employees can spend more time on making valuable financial decisions.
5. The Automation Revolution
You may have figured out by now that automating processes for your AP operations provide a host of benefits that include less payment processing time, fewer errors and more potential for human resources in the financial control sectors. But is worth spending your resources on automating AP functions? The short answer is a resounding yes. If automating invoice processes means increasing your proficiency and decreasing costly problems, then the investment is certainly worth reaping its benefits. Interestingly 59% of company leaders expressed that budgetary limitations are the main reasons why AP automation is not implemented. Sadly, this is simply not the case. What's more, 33% additional executives aren't aware that this technology even exists as a current solution, while many department employees continue to feel the pain of cumbersome outdated payment processes. It is clear that more awareness needs to be made in the business sectors for the unlocked financial potential in the latest automated payment technologies.
Your Advocate in Expenses for Today and Tomorrow
If you're not sure where to start in identifying your company's hidden financial potential, Valicom can help. Our proven finance management strategies have assisted with increasing the ROI of corporate organizations for more than two decades. We'll partner with you and listen to your needs to develop a plan that's uniquely tailored to your company structure and current situation, helping you save time from tedious detailed and repetitive functions. We can also help you meet auditing compliance guidelines that include SSAE16 and the Service Organization Control reporting framework so you can facilitate your focus on making other important decisions that will guide the future of your business. Contact us today to see what we can do for you!
About the Author: Chantel Soumis
Chantel Soumis brings over a decade of knowledge in workflow enhancement through the use of technology. Chantel studied marketing communications and business administration at Franklin University and proceeded to work in a fast, ambitious environment, assuring client delight in the healthcare and pharmaceutical industries. Passionate about project productivity and streamlining workflows through the use of technology, Chantel strives to inform organizations of Valicom’s advanced telecom expense management software and services by mastering communications and messaging while delivering helpful information and supporting resources.