The key advantages of cloud-based software, namely access to sophisticated technical systems without the burden of upfront capital expenditure or the need for extensive and ongoing IT support, need no further explanation. Discussion has now moved on to how these increasingly flexible ways to use technology can benefit and add value to the organisation.The key advantages of cloud-based software need no further explanationClick To Tweet
Across the enterprise, the use of technology frees up staff to carry out work that requires the finesse of human input. When it comes to finance, as noted in this article, cloud-based accounting platforms mean that software can do more of the ‘heavy lifting’ of tasks such as data entry and reconciliations, enabling accountants to provide more value-added advisory services.
Within an organisation, accounts payable teams are also benefiting from cloud-based systems that can relieve them of the labour-intensive, repetitive tasks they have traditionally undertaken. In particular they are released from the burden of supplier statement reconciliation.
Supplier statement reconciliation is a key element of financial governance and a compliance requirement for some companies to ensure supplier liabilities are accurate. It is an in-depth checking process that ensures all invoices/credits have been received and there are no erroneous postings on the vendor’s account or potential duplicate payments waiting to happen.
However, while it is potentially business-critical, undertaking the reconciliation process manually is arduous and time consuming. A statement from a single supplier can contain hundreds and thousands of invoices while taking hours or even days to manually reconcile. Hardly surprising then that it’s an unpopular job.Supplier statement reconciliation is a key element of financial governanceClick To Tweet
Not only that but, because managing the day-to-day task of processing invoices through to payment is already a full workload for the accounts payable team, only a select number of supplier accounts can be reconciled.
Introducing cloud-based automation technology
Step forward automation. Raise the bar further still and make the automation software available in the cloud, and therefore straightforward and affordable, and statement reconciliation is transformed, meaning accounts payable have only the exceptions to manage.
Statements received in paper, PDF and Excel formats are uploaded into the cloud-based statement processing system and automatically reconciled against data from the accounts payable ledger. Any credit notes and invoices that are missing or duplicated are flagged, so that immediate action can be taken. Any miss-postings and/or data errors are highlighted for the accounts payable team to investigate further.
The benefits of this relatively simple move are far-reaching.
Effective use of human expertise
Instead of laborious statement checking the accounts payable team can focus on resolving the exceptions flagged by the automated reconciliation system, proactively requesting missing invoices and credit notes from suppliers for example. Sharing reconciliations directly with suppliers enables them to see the real-time status of their account and cuts down the volume of phone call and email queries to the accounts team, freeing up their time still further.
Organisations have a real-time view of the invoices and credit notes that have not yet been processed. This gives them an accurate picture of their supplier liabilities, improves accruals reporting and validates the accuracy of their invoice processing. Duplicate invoices (and the subsequent payments) are easily spotted, as are payments to suppliers that cannot be matched to an invoice. Easy visibility of these means payments can be recovered and cash flow improved.
Meanwhile, the accounts payable team can add direct and visible value to the organisation because they have time to focus on tasks that require human insight, rather than carrying out essential, but mundane and time-consuming activities.
The advantages of cloud-based statement reconciliation extend beyond the organisation. Relationships with suppliers can be improved because they have a 360-degree view of their statement status without having to call (or chase payment). In the long term this has the potential to strengthen the supply chain.The advantages of cloud-based statement reconciliation extend beyond the organisationClick To Tweet
Making good business practise affordable and accessible
Statement reconciliation is clearly good business practice but prior to the flexibility offered by cloud computing, automating the process was out of reach for many organisations. Today, affordable and accessible software means it is a straightforward step to eliminate much of the repetitive activity it requires. The end result is a streamlined organisation that can maximise the expertise of its accounts team and develop a strong supply chain.