Seize the Automation Opportunity at Your Digital Front Door

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Seize the Automation Opportunity at Your Digital Front Door

Matt Shanahan, Co-Founder and Chief Strategy Officer, Lockstep

Matt Shanahan, Co-Founder and Chief Strategy Officer, Lockstep

The pandemic and its ongoing restrictions have created a challenging time for finance departments, especially the accounting function. Many organizations tried to adapt their legacy paper workflows amidst work-from-home mandates across the globe. This transition to remote work pushed many finance departments headfirst into the digital transformation journey, with many struggling to adapt their legacy workflows.

While some departments had a low level of workflow automation, the continued use of spreadsheets to manage receivables and payables workflows indicates that transformation for accounting teams remains unfinished. Research and conversations with accounting departments demonstrate that very few have taken the steps they need to become truly digital.

Especially in the new normal of remote work, this creates a series of issues and inefficiencies. The digital transformation of the accounting front door through AI, workflow, and automation can dramatically improve cash flow. With cash flow as an imperative, CFOs, controllers, and accounting managers need to deploy digital transformation solutions to manage cash flow more effectively and efficiently in the face of ongoing volatility over the long term.

As it stands, the digital front door of accounting workflows is a departmental email address such as accounting@company.com or ap@company.com.  Emails received through the departmental email address are quickly moved to personal inboxes by accounting staff to process the email.  Personal inboxes are inherently manual, given that they are, in fact, private and only accessible by the email account owner. Once an email workflow begins in a personal inbox, the activities and data are sucked into an information black hole as the workflow and status are no longer visible to other team members.  If that person is out-of-the-office or busy on another project, the workflow can stall, and suddenly it becomes a bottleneck. With each personal inbox, the possibility and likelihood of bottlenecks increases.   And what if someone leaves the company? Or goes on vacation? Requests and follow-ups to that unique email address that go unaddressed can lead to disruptions in operations and damage to vendor or customer relationships, among many others.

Lockstep surveyed more than 850 accounting staff, and our research found that over 90 percent of accounting departments use Outlook or Gmail and spreadsheets to manage their receivables and payable workflows. While the generic email address may serve its function for the initial email exchange, the ongoing workflow occurs from a staff member’s personal inbox, creating inefficiencies that negatively impact cash flow.

Personal inboxes are cash traps that slow down collections and increase past-due deliverables, but they also cause cash leaks when duplicate invoices are paid, early discounts are missed, or fraud goes undetected. Simply put, personal inboxes impair cash flow, and in today’s world, finance and accounting departments need a new approach to managing and automating workflow.

Other departments use advanced automation behind their departmental email addresses.  Customer service uses support software to assist customers and manage contact records.  Human resources use HR automation to work with candidates. IT uses help desk software to serve employees. The finance department should do the same and abandon personal inboxes for an enhanced ‘accounting inbox’ integrated with their existing ERP or accounting software.

Like many other types of workflow automation solutions, an accounting inbox provides a shared workspace with roles, assignments, and increased transparency. As emails come into the inbox, they’re assigned to a team member, and the entire team's responses are tracked and viewable. Utilizing this type of workflow technology creates fewer opportunities for things to get lost in a siloed inbox. It’s also easier to track and manage response times to customers and vendors.

Approvals for invoices, disputes, and early payment discount offers require tracking and follow-up to ensure timely payment and collection. An accounting inbox automates approval management and accelerates the approval cycle.

In addition, an inbox also organizes workflows and communications for each vendor and customer, allowing for the history to be stored outside of a personal inbox, providing one searchable source of truth. Other automation saves the team from manually filing emails and attachments along with the inevitable filing mistakes that come about with manual tasks. 

Just as the accounting inbox monitors vendors and customers, it can also help monitor fraud, which has become more and more prevalent in recent years. Should an email arrive from an unknown email address, the accounting inbox can flag it as new and determine if it matches with vendor or customer master records in the ERP. 

The new way of working has brought attention to cash traps and leaks caused by using traditional email software to manage accounting workflows. By digitally transforming this critical function, organizations can improve cash flow, increase working capital, and preserve the most valuable resource – staff time.

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