The risks of at-home finance operations
Since the lockdown, payment postponements, process fluctuations, fraud, and data blindspots have increased dramatically for organisations processing invoices manually from disparate at-home locations. We investigated why.
How World-Class Organisations are Overcoming Risk by Optimising Through Automation
In a world of constant change and uncertainty, establishing a foundation for your business-critical processes is essential to achieving world-class agility and performance — and that’s never been more evident than in today’s at-home work environment.
Prior to the outbreak of COVID-19, organisations with automated accounts payable and accounts receivable operations experienced enhanced efficiency, resulting in faster payments, improved customer relationships, fraud protection, complete compliance, and greater control over their cash flow. For companies relying on paper or PDF invoicing, and even those with shared service centers, human error, lack of visibility, process inconsistencies, and security breaches led to payment delays, non-compliance, fraud, and customer dissatisfaction. Billing staff, meanwhile, were consumed by calls and emails, customer confusion, and invoice corrections, hampering the department’s ability to contribute strategically.
Since the lockdown, payment postponements, process fluctuations, fraud, and data blindspots have increased dramatically for organisations processing invoices manually from disparate at-home locations. We investigated why.
The Impacts of Remote Work on Finance Operations
Non-Compliance and Fraud
With staff working from home in remote locations, with divergent internet capabilities and IP protections, security protocols have been weakened, leading to data breaches, phishing attacks, fraudulent invoicing, and financial losses.
In fact, businesses across the world are facing new kinds of invoice and payment fraud, through the use of valid IBAN numbers and other vendor master information requiring validation of banking details.
Furthermore, with centralised administrative functions often in low-wage areas affected by unstable internet and weaker protocols, and the use of shared computers and mobile devices for business purposes, network and hardware security lapses have significantly increased, exposing organisations and individuals to private data leakage and GDPR non-compliance.
Process Instability
With processing delays, decreased cash flow and differing regulatory mandates across countries and regions, global process maps and exception management processes administered by KPI-driven shared service centers and central administration hubs are being sacrificed in favor of more relaxed and country- and region-specific processes, creating an inefficient, less measurable and less secure new normal — and the need for organizations to revisit pre-pandemic policies at a later date.
Key questions for organizations now and in the future include:
- How do we address the governance issue of relying on remote workers for validation?
- How do we manage escalation cycles and exception queues with financial staff in different locations?
- How do we make payments when our credit card machine is locked away in a safe in the office?
When Paper Fails
As we’ve noted before, leaving a paper trail may be necessary for legal and compliance purposes, but relying on manual paper processes can bring your cash flow to a halt — especially in the Coronavirus-era remote work environment.
Paper and PDF processes aren’t efficient, scalable or trackable, and when paper fails it disrupts not only your daily financial processes but your business’s ability to move beyond merely cost-cutting to creating actual value. When paper fails during a global crisis, you face a complete system breakdown.
Historically, organizations have relied on centralised scanning and mail centers for paper invoices; office or department email boxes for PDFs; and shared phone lines for addressing questions for business partners. With financial staff working remotely, all invoices are being mailed to people’s homes and emailed to private IP addresses, increasing process visibility and historical data accessibility issues, causing delays and lost deliveries, raising serious security concerns, elongating payment terms, and damaging customer relationships.
Long-Term Disruption
Shared services and central administration roles are unique in how their success is measured, and accounts payable and accounts receivable departments are struggling to manage processes from home and address significant shifts in the most critical KPIs, such as the number of invoices per person, percentage straight-through processing, and percentage paid on time.
As a result, finance departments are being forced to dedicate time and resources to reconsidering and creating new KPIs.
For instance, KPIs are typically backward looking because they’re based on historical information, but now they need to be based on dynamic real-time enterprise metrics. In addition, there is likely now a need for new metrics like percentage self-help aspiration, percentage use of portal, or percentage minimized exceptions.
For organizations unwilling to automate their accounts payable or accounts receivable processes, these adjustments can represent a significant undertaking.
From Risk to Reward
Historically, some Chief Financial Officers and other financial decision makers have hesitated to implement new accounts payable and accounts receivable technologies, often due to a desire to focus on optimising departments with ostensibly greater opportunity for immediate return on investment; an incomplete understanding of the scope of the potential problems caused by manual processes; fear of software implementation, and employee and business partner training costs and delays; or the belief in the old idiom that if the current process ‘ain’t broke, don’t fix it.’
The global pandemic, however, has demonstrated that, in many cases, manual processes are broken.
The impact of COVID-19 has highlighted the deleterious effects that manual processes can have not only financial operations but on the health of the overall business — and how the consistency, visibility, and protective measures built in to automation can make or break an organisation during a crisis.
So, how do you prevent risk, maximise cash flow, and optimise for the long-term success of your business?
To start:
- Conduct regular system health checks and address weaknesses
- Ensure your invoice processing is simple and scalable
- Prepare for the fiscal changes resulting from a possible ‘second wave’
- Automate your billing processes
According to Billentis, “the digital transformation is no longer an option, it’s the imperative.” And with Total AP and Total AR from Tungsten Network, you’re 100% digitised from day one.
With Total AP for accounts payable, you upload your invoice to the platform for buyer review, processing and approval, and upon approval payment is sent — and you can accommodate all your suppliers, regardless of size, location or maturity.
With Total AR for accounts receivable, you submit one file, through any channel, in any format, and deliver all your invoices to all your customers — and you can release cash to the balance sheet and gain business agility.
It’s simple, streamlined, and cost effective.
Find out how Total AP and Total AR from Tungsten can deliver the agility your business needs to reach world-class status, even during a global crisis.
