What Hybrid Work Means for Finance Teams
Navigating through the twists and turns of a tumultuous pandemic economy, the finance industry was forced to make drastic operational changes. Now, workers want the best of both worlds. A survey of more than 9,000 workers found that 83% want a hybrid work routine – driving businesses toward a tech stack that’s flexible and secure.
Fortunately, the accounting industry is already on pace to make the transition. 42% of finance leaders say COVID-19 increased their company’s pace of AI adoption, and another 84% mention that automation helped them significantly during the pandemic.
The rapid pace of automation in accounts receivable (AR) and accounts payable (AP) has given businesses the opportunity to quickly adapt the way they work. Accountants have gained more time, data security and flexibility, whether working from home or the office.
Businesses no longer see automation as a temporary or a standalone system fix, but as something that adds more value to the back office, allowing finance teams to perform tasks such as automated debt collection and digital payments.
Here are some of the reasons why organizations are investing in AR and AP automation for their day-to-day operations in a world of hybrid work.
AR automation provides finance teams easy access to customer data, eliminating unnecessary delays
In AR, the case for digital innovation is strong. Research shows that 50,000 businesses a year go under because of delayed B2B payments. And collecting cash from customers has become more challenging in a hybrid work environment.
Traditional collections have always been inefficient. It’s not uncommon for an AR team to spend 20% of their time manually contacting customers for payments, and this time expense takes attention away from managing other tasks, such as identifying at-risk customers or handling disputes.
Internal problems caused by remote work have impacted efficiency further. AR involves multiple people spanning sales, operations, customer support, and even the legal function. These teams work on different systems to manage their data and all this information needs to be accessible for an AR professional to perform their role. This is far harder to manage when teams aren’t in the office and any time wasted sourcing data impacts how quickly cash can be brought into the business.
Cloud-based, AR automation helps teams get on the same page by providing “any time, anywhere access” to customer data. This information is pulled from ERP, CRM, accounting and billing systems, and consolidated and intuitively organized on meaningful, cloud-based dashboards. This powers improved reporting for AR teams, enabling them to collaborate effectively - no matter where they are based - and intelligently leverage real-time data to drive better business decisions.
Collections efficiency is realized through automation, delivering payment communications and reminders to customers on a regular, timely basis. This minimizes the risk of late and missed payments and consistently provides the information customers need to manage their accounts.
Unlike traditional methods, cloud payment allows businesses to process payments at a much faster rate through multiple methods such as virtual credit cards or ACH/EFT
More than 40% of B2B payments are still made via paper checks and invoices. Although check payments can be slow, unreliable, and even unsecure, organizations are reluctant to move away from this method. Having spent a long time developing their check-based processes, digital transformation can feel daunting.
But transform they must. In the last year, the entire process of manually handling checks, deposits, and even visiting the bank was disrupted, and this caused late payments and frustrations for both AR and AP teams.
For receivables, a smart AR platform provides online payment processing, ensuring that payments are faster, simpler and more secure. It also offers multiple payment options, which helps decrease the number of late or missed payments as customers have a variety of ways to meet their obligation. And in today’s climate, online payment options are expected by your customers.
On the accounts payable side, teams that use an AP automation platform can easily manage approvals and release vendor payments from anywhere with just a few clicks. This helps mitigate fraud and errors such as duplicate payments, while freeing up time for other activities.
Some of the top expense-related challenges for finance teams are lost receipts and incomplete reports
Expenses Made Easy
Expense violations skyrocketed by 292% in 2020. Considering employee expenses like T&E will be the most important costs to be reintroduced this year, the need to monitor and control spend is critical. Especially when 46% of businesses do not track the cost to process them. But that’s not the biggest challenge. CFOs say one of their top pain points is employees losing paper receipts or submitting reports without them.
Entering a hybrid work environment, businesses are taking action to streamline the process and make expense management much easier. A big majority, almost 70% of 200 CFO’s surveyed recently said they are digitizing the whole experience of expense submission, approval and reporting. This means employees can take snapshots of their receipts and submit through a mobile application. Their manager can approve and reimburse electronically too – all without involving a tangle of paper and staples.
With traditional expense management, companies relied on complex spreadsheets to process, pay and audit employees’ expenses. Automation tracks their spend behavior electronically and determines how the organization will reimburse them for the costs incurred.
31% of businesses have removed paper invoices this year, setting a preference for new contactless accounting processes
Almost 70% of all invoice processing globally is paper-based. When handled manually, it takes an average of six days to process just one invoice – costing USD $15 each. Whether they’re received digitally or by snail mail, invoices must be scanned, sorted, routed, keyed in and then filed in a cabinet or folder. As systems go, it isn’t very economical and certainly isn't the most efficient.
Taking approvals into account, the AP timeline is drawn out even further. Our survey of over 200 AP professionals found that they spend 20% of their time per week managing approvals. This roughly equates to one in five days spent just on follow-ups. “A flaw that we had with that system was that there was no way to see if the invoices and purchase orders had received the proper level of review and approval. We had to document that through emails,” says Jose Breton, CAO at Brickell Biotech.
With the pandemic-imposed limitations, businesses have moved years ahead in just a few months. Almost a third (31%) of SMEs have removed paper invoices this year, reducing the cost of processing an invoice by up to 80%. Vendors submit their invoices electronically, and the payment is processed online through ACH/EFT, VCC, or e-checks.
No matter how complex the approval chain, the AP software does the chasing by sending automating reminders. Managers can approve through the web or mobile, leave notes for further clarification, and once signed off, the solution will export all details into the ERP.
Time To Get Smart
We’re still wrestling with the pandemic and its impact. And maintaining or improving operational efficiency while adapting to hybrid work may be the biggest challenge of all.
The companies that have successfully navigated the last year saw the importance of implementing smart technology in their finance processes. Whether that decision was driven by a desire to collect cash efficiently, process payments effectively, or to more easily provide employees and customers access to the information they need.
This blog was written in collaboration with Beanworks by Quadient, an accounts payable automation software.