In contrast to larger organisations, smaller businesses are expected to work more efficiently, and with less clutter. Non-productive activities and redundant job responsibilities should be identified and cast aside.
However, surprisingly, that is often not the case. As soon as there’s a significant amount of tasks performed by different people, and there are dependencies across those tasks, the same challenges arise for small businesses as they do for larger companies. Operationally, the company is only as efficient as the individual effort and energy of each team member.
A common inefficient process
A great example of a very common inefficient process is that of financial document approval. According to the report prepared by Tungsten Network, the biggest issues causing late payments were too many paper invoices received (49%), as well as the lack of automated approval (43%).
Even with cloud solutions replacing desktop software, the reality is that, in many organisations, paper and email-driven approvals are the most frequent way of securing financial document authorisation.
And this approach to obtaining approvals has a number of significant drawbacks. These are translated directly to the extra hours your personnel are spending on approvals – or, in other words, the extra expenses your approvals cost you.
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Where is this time wasted?
There are a number of process inefficiencies contributing to the unnecessary increase in cost of the approval process. Let’s take a look at some of the most common:
- Time wasted identifying approvers.
This applies to both accounting practices providing financial service outsourcing and internal accounting teams in larger organisations. The challenge is to identify the approver with the appropriate level of authorization, and at the right approval step, to make sure the approval you are obtaining is valid both from an accounting and a business perspective.
Things get complicated with geographically distributed teams when there is no easy way to drop by and ask for the right contact. Other challenging scenarios are those of newly set up practices while the team are still familiarising themselves with the new business rules – or with frequently changing Approvers in the case of frequent approval delegation, for example.
- Time wasted looking for approval related info.
This challenge comes from the incomplete data included in the approval request, for example if the approval request is a print out of a Bill for signature, or a Bill forwarded as an email with no background of who originated the expense.
The Approver is forced to start their own investigation into the Bill’s background. For instance: Who originated the expense? Was there a corresponding purchase order? Has anyone looked at the bill and authorized it before? Is the expense within the allocated budget? Etc.
- Time wasted chasing managers for their approval.
This is the biggest pain and frustration for most accounting team members involved in spend control. Activities include sending out multiple email reminders, keeping in mind all approval due dates, and trying to track the approval process to make sure the approvals are secured on time – which often doesn’t happen!
- Time wasted identifying who is actually delaying the approval.
If you have multiple concurrent approval processes running with multiple approvers involved and inter-dependent approval decisions, it is often essential to quickly understand which approver is actually delaying their authorization decision in order to push the approval process forward.
In case of email or paper-driven approvals, this process can take days of tracking down each thread. In contrast, with an approval workflow system, all you need to do is run a report that will pick up the delayed approval steps with the approver names associated, so that you could immediately send out an additional notification/push to each approver.
- Time wasted preparing audit reports.
Multiple email chains need to be examined in order to reconstruct the approval decision history and filter out the required data. Things can get complicated when approvals are done in different media – paper, email, Excel files. In that case, tracing back the authorisation decision is daunting.
Use data and process automation to overcome these challenges
Improving process efficiency, minimising manual intervention, and decreasing costs is the ultimate objective of data and process automation.
In general, data automation includes the following key activities:
- Document submission, including digitizing invoices and expenses.
- Workflow-driven approval of Purchase Orders, Bills, and Expenses.
- Practice management, including proper document archiving.
- Client management, including mobile app, reminders, and exception handling.
- Reporting and analytics, including audit reports and expense reporting.
- Fraud detection policy management.
Using data automation apps, you can achieve better data quality – as in, make sure your data is complete, verified and auditable – as well as significantly cut on the process costs.
For more information, sign up for our Webinar on Data Automation, or view the recording of the lucent advisory case study.