While it is always a good time to evaluate systems and look for efficiencies and process improvements, now more than ever it makes sense to consider a switch to an online bill payment system.
A traditional accounts payable function often looks like the following:
- A vendor invoice is received in the mail and entered in the accounting system.
- The invoice is stored in a folder until the payment is due.
- When payment is due, a check is printed from the accounting system.
- The check is then placed with the invoice and routed to management, who reviews the documents and sign the checks.
- Copies of the checks are made and stored with the invoices in a filing cabinet.
- Checks are placed in the mail and sent to vendors.
- Every few years, those invoices are put into storage and kept for five to seven years.
There is nothing inherently wrong with the above process, but with advances in technology and security, an online bill payment system can address most of the downside and inefficiencies associated with the above process. Conceptually, there are not many changes from the above outline when switching to an online bill payment platform. Rather, the platform allows for modifications and enhancements to the process which improve efficiency and add convenience for the personnel and management involved. Most importantly, it can save your team a significant amount of time and ultimately money.
The following are some of the issues with a traditional, paper-intensive bill payment process:
- Increased time & cost: while there will be a cost to use a bill payment platform, the savings in time spent performing these tasks will far outweigh the fee paid to use the platform. Later, we will dive into all of the ways an online bill payment platform can save you time.
- Increased risk of fraud: with a traditional process, a business owner or management may give a signature stamp to the accountant at the company. This saves the owner time, but makes the company susceptible to fraud, especially if there is only one person in the accounting department performing all functions related to recording and paying bills.
- More storage requirements: The above process is often still done with actual paper, which not only takes up extra space in the office but will then require the company to pay for storage to keep old boxes until they can finally dispose of the records many years down the road.
- Lack of convenience: The traditional process requires the person entering bills and the person signing checks to physically be in the office. With a move to more of a remote workforce and the burden of a busy schedule for business owners, the ability to work from any place at any time is becoming increasingly important. Unfortunately, the traditional process often does not allow for remote processing.
The ideal system and processes will depend on what accounting system you are using and can manifest itself in a variety of ways. Some more robust accounting systems – think SAP or NetSuite – especially where the accounting system is part of a larger ERP, allow you to perform most of the processes discussed above within the accounting & ERP system itself. For example, actual invoices can be scanned and stored within the accounting system, then routed to a manager for electronic approval, and exported into a CSV file that can be uploaded into your bank’s portal, where payment is ultimately approved by a CFO or other executive. This type of system would typically apply to larger businesses. For the smaller businesses, an optimal bill payment platform would typically be separate from the accounting system, such as QuickBooks Online or QuickBooks Desktop, but would integrate directly. In Part II, we are going to discuss how this optimal system would function.