April is Financial Literacy Month, a time to highlight the importance of understanding finances.
Many may feel that they have a solid grasp on their finances, but studies have shown that many U.S. adults, around 43%, lack basic financial knowledge.
When this knowledge gap exists among your workforce, it can have detrimental effects on both individuals and the business as a whole. This is particularly important for your AP department, as it needs to understand the broader operations of your business in order to avoid negative consequences like inefficient invoice payments, fraud risks, strained vendor relationships, and overall lack of engagement and accountability among team members.
Thankfully, there are tools like AP automation that can help bridge this knowledge gap. By advocating for AP software investments, you can equip your team with a powerful tool to give them a better understanding of your company's finances.
Let's explore the benefits of AP automation and how it can improve financial literacy among your AP team.
Enhancing your team's financial awareness yields valuable insights and operational benefits. Here are four advantages of strengthening financial literacy within your AP team, and how automation can support your efforts.
Improving your team’s financial literacy increases their ability to hold themselves, and each other, accountable.
On average, companies take 10 days to process a single invoice from receipt to payment because of backlogs and process bottlenecks that most frequently arise due to poor process visibility.
Multiply that by the hundreds to thousands of invoices you process weekly, and the threat to operational efficiency becomes evident.
When processes are automated, however, teams gain insights that strengthen their financial awareness and help them take responsibility for these productivity barriers. By empowering them to address these issues through heightened transparency, you build a culture of accountability among your team.
AP automation allows you to establish standardized procedures for processes like invoice approvals, outlining each step and tracking progress from a single location. This includes assigning tasks to team members and tracking their progress, providing clear insights into specific responsibilities and deadlines for individuals and teams.
Team members can also track the status of invoices in real-time, so they know who's responsible for each step. AP automation software creates a digital audit trail, documenting every approval step including who approved an invoice and when. This helps teams identify and fix any bottlenecks or delays in the process.
Lastly, an accounts payable automation solution should include approval controls and permissions to ensure the right people are reviewing and signing off on invoices before payment. This prevents unauthorized payments and holds everyone accountable for their actions in the process.
As an AP manager, you know that accurate insights are crucial when reporting to your CFO and executive leadership team.
To ensure those insights are reliable, you need to capture the right data.
By improving your team’s financial literacy, you help them understand the significance of timely and accurate payment updates. This understanding allows them to provide you with the right information to make informed decisions.
For example, when invoices are processed promptly and accurately, it strengthens your ability to manage your department's cash flows and budgets. This directly impacts your company's budget forecasting and enables more informed financial decision-making and future planning for the business as a whole.
Best-in-class AP automation solutions come equipped with a range of features designed to enhance the accuracy of collected data, leading to improved business forecasting capabilities.
First, custom reporting can generate insights into important metrics, like the average invoice lifecycle or the number of on-time and early payments made in a given period. These insights are captured automatically by the system, eliminating the need for additional work from you or your team.
OCR scanning also makes it easier to capture data from invoices by extracting and organizing information automatically.
However, even with 98-99% accuracy rates in standard OCR systems, a margin of error remains.
A premium AP solution will offer OCR scanning that's powered by AI technology, which becomes more reliable with every use. This improves the accuracy rate over time and greatly minimizes the need for manual intervention.
As a result, your team has less work to do, and you can trust the data you collect and store without worrying about errors from manual entry.
Best of all, this data can sync automatically across all of the systems you use.
By integrating payment activity with your ERP, AP software creates a single source of truth, allowing you to pull reports on vendor activity, invoice payments, and more from a single location with confidence instead of spending time reconciling inconsistent data across separate platforms.
According to a Gallup survey, only 21% of employees feel engaged in their job, indicating that 79% don’t find their work meaningful.
When your team lacks engagement, negative effects like higher rates of absenteeism, increased turnover, and reduced productivity are far more common. On the other hand, engaged teams tend to be more committed, loyal, and productive in their roles.
One reason employees tend to feel disconnected from their work is poor visibility into business objectives and how their individual responsibilities contribute to the overall success of the organization. By granting greater visibility into your company's goals, you can boost employee engagement, morale, and motivation.
Providing supportive tools–like AP automation–is essential in helping your AP team understand the significance of their efforts.
The same configurable reports that help you make better budgeting decisions can also help your team understand their place in driving financial success, so it’s important that your AP automation software provides real-time and centralized visibility into financial metrics.
This helps give your employees a holistic view of the company's financial performance and progress toward its goals. It enables them to track KPIs, like the rate of early, on-time, and overdue payments, which can help them understand how their day-to-day tasks and responsibilities impact the overall financial health of the business.
Moreover, automation of mundane tasks, including manual invoice entry and 3-way matching, gives your employees more time to focus on more fulfilling duties like facilitating smooth supplier onboarding and strengthening vendor relationships.
When you give your employees the power to spend less time on tedious work and more time building relationships, thinking critically, and making strategic plans, they'll feel more involved in their role and more certain about the impact they're making on the company as a whole.
A key responsibility of an AP manager is making sure payment processes follow any compliance measures that apply to your company or industry.
By improving your employees' financial literacy, you help them understand the importance of compliance in AP processes, such as adhering to internal controls, following company policies and procedures, and obeying relevant laws and regulations.
They are also aware of the risks associated with non-compliance, like financial penalties, legal liabilities, and reputational damage. This understanding motivates them to comply with processes and guidelines in place, reducing the likelihood of errors or fraudulent activities that can occur due to non-compliance.
AP software allows you to control and define your processes, and by automating your workflows, you ensure that your team operates within any compliance measures that you’ve specified.
For instance, if invoices over a certain value threshold require approval from you or an executive leader, you can easily configure business rules to escalate those invoices automatically.
Ideal AP systems also use intelligent OCR scanning to extract and evaluate dollar amounts on invoices, ensuring compliance with limits and routing accordingly. This eliminates manual efforts while maintaining consistent adherence to policies.
With configurable retention periods, immutable record archival, version tracking, and compliance with regulatory standards (including SOC 1 & SOC 2, HIPPA, FIPS 140-2, PCI, CJIS, ITAR, Nacha, FINRA, and more), DocuPhase is an AP solution that offers peace of mind regarding the compliance of your processes and the safety of your sensitive financial records.
Financial Literacy Month is a great time to prioritize fiscal awareness for your team, but it's crucial to remember that this should be an ongoing effort.
By consistently evaluating and investing in tools that promote financial literacy, you can empower your employees to be more efficient, informed, and engaged. This not only helps your team members individually, but also makes you a more effective leader who consistently achieves results that contribute to the overall success of your organization.
How do you promote financial literacy in your organization? Share your ideas on social media, and be sure to tag @DocuPhase!