What to Know Before You Automate Payables and Payroll
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Although managing payables and payroll in-house might seem like a logical choice, it can take a surprising toll on your business’s efficiency. Streamlining operations can free up resources for high-value tasks and enhance results. Before you decide to automate, however, ask yourself the following questions:
1. Can you see what you’re missing? Improving visibility into cash low and cash management is a top priority for 78 percent of finance executives.1 Without this insight, the finance team struggles to effectively manage and forecast its cash position, and finance leaders lack access to the information necessary to make decisions. In addition, manual systems often cause businesses to miss the opportunity for early payment discounts.
2.Have you analyzed how you operate? Using technology to speed up a process can do only so much good if the process itself is flawed. Redesigning processes can lead to dramatic performance improvements that the right technology can then optimize. A good historical example of these efforts is Ford Motor, which began automating processes as early as the 1980s. The automaker revamped its goods acquisition process and— in conjunction with database automation—reduced payables headcount by 75 percent and improved accuracy. Ford achieved these gains by looking at the process from a cross-functional perspective, rather than focusing on a specific department or task.2 On their own, automated systems can save businesses as much as 65 percent per invoice paid.1 Combined with streamlined processes, they can offer even greater savings.
1. Have you estimated the true cost of doing it yourself? Thirty-eight percent of small-to-medium sized businesses spend at least six hours a month managing just payroll taxes.3 Over the course of the year, that’s 72 hours—or nearly two weeks of work—and this doesn’t cover all of the other aspects of payroll management, such as time spent cutting, signing and distributing checks and answering employee questions. Automating payroll can reduce processing costs by as much as 80 percent, according to the American Payroll Association, primarily because it helps eliminate errors. Payroll mistakes can have negative legal and financial ramifications, so preventing errors helps reduce risk.4
2. Are you overwhelmed with paper? NACHA, the Electronic Payments Association, estimates that direct deposit can reduce administrative costs by as much as 50 percent a year.5 In addition to these cost savings, paying employees by direct deposit eliminates paper checks, which can be altered or counterfeited. Paper checks also include your business’s account number, which can increase fraud risk. With direct deposit, however, your account number remains confidential. For employees without bank accounts, select solutions offer the option of payroll cards so you can truly eliminate paper checks.
Once you’ve thought about these key questions, talk to your banker about implementing automated payables and payroll to help boost efficiency and decrease risk at your company.
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After taking over the business she’d worked in for more than two decades, Diana Herrera is finding new ways to invest in technology—and employees—to build on Associated Photo & Imaging’s track record of quality and innovation.
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