Pablo Casals, the cellist, conductor, and composer said this to convey that great talent makes virtuosity look simple. The practice and years of study lead great musicians to look effortless. Great athletes make their sports and athletic feats look easy. Is this same simplicity possible in the process of business recordkeeping? Should we strive to make it look easy and indeed make it more graceful?

In their rawest simplicity, accounting procedures and reporting requirements are about defining revenue and expenses, while protecting corporate assets. Using the detailed information captured, a business can meet mandates to measure performance and regulatory requirements determined by agencies like the Internal Revenue Service and the Securities and Exchange Commission.

Capturing this detailed information demands discipline and process that examines the minutiae of each transaction for accuracy. For the transactions associated with a buy decision, this means matching the purchase order to the receiving document to the invoice, and the associated authorizations and attention to specific line item pricing is essential to this process. It is the first step to cost containment, fraud elimination, and asset visibility.

But, taking a step back in our analysis of the transaction, more fundamental questions need to be asked. Who determines whether approved vendors were used or approved items were purchased? Does distributing the buy decision make the payment of invoices and number of vendor relationships that our businesses have more complex than necessary? Is this buying positioning us for better buy decisions in the future?

Besides, depending on the transaction volume, this current process is fraught with cost and inaccuracies. For most of us, the costs involve significant time per transaction cycle. One estimate shows each buy transaction costs between $80 and $200! In addition, since the data entry process is human-based, every data entry point throughout a transaction cycle is an opportunity for an error.

The solution is software specifically designed to simplify the procure to pay cycle. Recently, I spoke with David Furth, General Manager of Basware (Basware.com/us), a Finnish-based solution provider with a Casals vision of accounts payable. Make it have perfect technique!

Based on our conversation, the following are some of the key points in considering adopting this different model of this process in your business:

Change the focus. For most of our businesses, the procurement cycle is focused on moving the transaction forward. Buy it, receive it, pay for it.

In addition, often the visibility of the flow of transactions through our finance departments is limited; for example, an invoice hidden in an inbox is seen as lost, especially for month-end and year-end accruals. Finally, the speed of processing is slowed by approvals that bog down the paper flow for even recurring invoices leading to problems like utility shut-off disasters and lost discounts.

Basware moves the focus to informational analysis and policy compliance using rules-based criteria. Products like Basware move those purchases that meet the guidelines and hasten their processing appropriately while flagging purchases and receipts that fall outside these guidelines.

Articulate procurement policies. Instead of relying on departmental or (horrors) individually negotiated buys, this easy process communicates, shares, and enforces corporate-wide catalogs, contracts, and payment terms. The software mechanizes who can buy what from whom. It empowers the authorized employee, leverages the volumes and consistency of the buys, and improves efforts to impose vendor consolidation while creating a newfound discipline. It forces the purchasing department to to do its job of negotiation and proactively lead and monitor our expense spend.

Coordinate with ERP systems. Procure to pay is not a replacement, but an enhancement, to standard accounts payable and purchase order functionality in our ERP systems. It automates and imbues the discipline of automated procedures into traditionally heavily manual processes. Research organization Gartner estimates that a company with 180,000 invoices processed per year may see as much as $1 million dollars per year of savings by implementing this category of software. Basware’s solution leans heavily on technologies like imaging and optical character recognition scanning combined with workflow and process enhancements to accomplish this goal.

Implementation. In rolling out a solution, quickly realizing the benefits of functionality must come first and reporting should come last. To do this it must integrate with the in-place ERP software and extend the reach and flow involvement of that software. Also, a robust feature set will demand that in addition to features like intelligently scanning paper to populate account coding templates, the software should welcome digitally-based transaction components like EDI (electronic data interchange) standard transactions and XML-based invoices. Each of these steps enhances the accuracy and assurances intelligent spend software bring to the table.

ROI. The value proposition of this type of software should be realized in year one. The direct and most quantifiable savings will be in head count for accounts payable processing. Otherwise, the project is likely to require too much organizational effort and has a high risk of overall failure.

Improved productivity and visibility in the corporate finance and accounting areas make this type of software doubly appealing for an environment engulfed by the mandates of Sarbanes-Oxley (SOX) and other new regulatory requirements of correctly accounting for all activity. It can cut costs to offset some procedural SOX costs and enforce business rules to flag questionable events in its reporting.

If you are processing more than 40,000 vendor invoices a year, this is technology you should consider. Basware is only one of a few prominent vendors that are helping customers make accounts payable easy. Let me know how much you saved!
 
CHAIM YUDKOWSKY, CPA, CITP, is Director of IT for the American Israel Public Affairs Committee (AIPAC) based in Washington, DC. He is also president of Byte of Success Inc., a technology consulting company specializing in helping small and mid-size business grow using technology. He is available for both consultation and speaking. He may be reached at cyudkowsky@byteofsuccess.com.