Accounts payable departments must follow a paper trail of records in order to correctly process invoices. Managing all of these records can be complex and time-consuming, but it doesn’t have to be if you’re using a modern electronic records management system (ERMS).
Challenges in the Manual Approach to Managing Invoicing Records
Many companies are still taking a traditional analog approach to processing invoices. This approach involves a series of steps that, at every stage, requires a person or a team of people to complete tasks manually.
A typical process might look like this. Your AP department:
- Receives an invoice from a vendor
- Enters the data from the invoice into the accounting system
- Cross-references the invoice with other documents to ensure accuracy
- Makes a scan of the invoice for digital storage and/or adds the paper invoice to a physical filing system
- Sends the invoice data to the appropriate party for approval, and once approved, the payment is made
This process comes with some clear drawbacks.
Excessive Time and Effort
Due to the inefficiency inherent in these manual steps, the entire process can take weeks or even months to complete. Employees find themselves repeating manual tasks, such as three-way matching and data entry, rather than adding value in more strategic ways. The burden of tracking paperwork to ensure it gets received, processed, and archived correctly can be extremely work-intensive and time-consuming.
Inefficient Filing Methods
Beyond the time and effort involved, companies are also left with inefficient filing systems—especially when they’re dealing with paper invoices and physical filing cabinets. Outmoded filing methods also make it difficult to access files when you need them, whether you need to provide documentation to a vendor, consult information, or comply with an audit.
Time for a Change
Overall, companies have been slow to digitize their invoice processing. A 2019 report found that 47 percent of firms were still relying on manual processes for approval, for instance.
However, increasing numbers of companies have begun embracing digitization and automation in their invoicing processes to address the challenges we looked at above. One solution that can make a significant difference is an electronic records management system.
Digitizing Paper Invoices
Before you can manage invoicing records digitally, you need the records themselves to be digital. The global e-invoicing market is growing rapidly, and yet many businesses are still invoicing their customers the traditional way with paper documents. If you have to process paper documents, the first step is converting these documents to a digital format. Simply scanning in records isn’t enough because this still leaves you with manual data entry tasks.
True digitization involves scanning to create a digital twin of the physical record and extracting relevant data from the record so this data feeds directly into your accounting system. The digital file will live in your electronic records management system.
What Is an Electronic Records Management System?
An electronic records management system is a software solution designed to automate records management tasks and keep records stored in a centralized and searchable digital repository. Companies can use an electronic records management system to streamline the way they capture invoicing data and maintain and access their AP records.
How an Electronic Records Management System Simplifies Invoicing Processes
An electronic records management system addresses all the pain points inherent in manual processes to greatly enhance operational efficiency. By digitizing records such as purchase orders, goods receipts, invoices, and more, you can:
Forgo Physical Records Storage
There’s no need to keep physical records when all your records are digitized and securely kept in a cloud-based storage system. Save space in your office, eliminate storage costs, and demonstrate a higher level of environmental sustainability.
Easily Access the Records You Need at Any Time, from Any Location
Digital storage also makes it easy to locate information when you need it, whether it’s to resolve a question or dispute, or to simply confirm information. Just type in a keyword such as a date or vendor name and quickly pull up what you’re looking for. Plus, you can access records from any location and device. All you need is the right login credentials.
Automatically Extract Data and Feed It into Enterprise Accounting Systems
Leveraging artificial intelligence (AI) along with your ERMS also allows you to automate data entry. Rather than looking at an invoice and typing in the data into your accounting system, the software does the work for you and can even do so with greater accuracy.
Automate Matching Tasks
Tasks such as three-way matching are essential to confirming payments, but these tasks can become extremely repetitive and work-intensive. Digitizing your system allows you to automate these matching tasks. Let the software do the work to cross-reference the right records and notify your AP department if anything is amiss.
Enable Robust Analytics
With so much data at your fingertips, you can easily gain insights that were previously out of reach. Track vital metrics and detect patterns that reveal opportunities for growth. This wealth of data empowers companies to make more informed decisions that propel them forward.
Learn More About Optimizing Your Records Management
Overall, an electronic records management system can help you streamline your operations to enhance efficiency, all while delivering more detailed and accurate data to drive your company forward.
Are your accounts payable and accounts receivable teams making do with time-consuming, outmoded processing methods? Evaluate your current process and learn how you can improve it with our checklist, “Optimize Your AR Document Management with Ripcord’s Machine Learning Technology.”