BIZ KQ, Business Knowledge Newsletter
Article 1: Expert’s Column
Online Document Management
With the help of internet and rise in technology, online document management has gained momentum and is increasingly popular amongst small and midsized businesses. It allows you to share files and get together over the internet with employees, clients, vendors or business contacts. Everybody in your team, workgroup or company can access and share documents from any location with an internet browser through a good internet connection. Since the entire service is delivered online (through the web/internet), there is no software to buy, download, install, or maintain. From within your browser, you can upload, browse, share and track your documents.
An online document management system is a computer system (or set of computer programs) used to track and store electronic documents and/or images of paper documents remotely through the internet browser.
- Easy to Use: An easy to use web-based user interface requires little to no training, as well as saving time while in use
- Low Cost: Since it is a web-based document management solution so there’s no software to install, no servers to maintain and importantly no upfront license fees
- Anytime anywhere: Access your information online, anytime, anywhere with just an Internet connection
- Share Documents Online: Share unlimited documents with employees, co-workers, partners and customers through the internet browser. Reduced paper, mail and postage costs
- Reliable and Secure: Service providers invariably have robust and secure infrastructure with redundancies built to tide over hardware issues. Most small mid size businesses lack the resources and the knowledge to replicate similar infrastructure internally
Online document management integrates well with accounting outsourcing solution. Small to midsized businesses using outsourcing services now have the technology whereby sharing of documents with the accounting outsourcing service providers is relatively easy and secure. A web based platform is where all the documents are shared helps both the company as well as the service providers to maintain updated accounting files, establish accountability and refer files in future. An effective data management tool also makes tracking of data, assigning multi-level access, integrating work-flows and allocating work to staff easier and streamlined in an outsourcing process.
Online document management companies provide administrative, backup, security, software upgrades, systems and database administration, hardware support and training. In sum, efficient web-based document management can be a simple, cost-effective time-saving way of sharing information within and outside your organization.
Article 2: Study and Surveys
Common Errors in Accounts Payable
After payroll, the largest disbursement of a firm’s funds is typically related to Accounts Payable.
Accounts Payable is often the single largest cost in the accounting function. Yet its’ often the least accurately tracked process due to the highly manual and transaction intensive nature of the process. This study lists the common issues and errors related to accounts payable processing that are found in most organizations.
Data Entry Errors
Data entry errors can occur on any invoice field and account for most of the errors in accounts payable processing. According to a research report, data entry errors average 1.6% of the total AP transactions! While the proportion may seem small, the absolute number of errors increases in companies with hundreds of AP transactions. This also increases the probability of the error causing a large dollar amount impact on financials and disbursements! The other source of risk is that these errors are not readily measurable and/or visible in most accounting departments. This ‘hidden’ nature makes it difficult to develop rules or actions to reduce the impact of these errors.
Matching of invoices to purchase orders and goods receipts/packing slips is complex and prone to errors as business rules for matching are frequently not documented or followed by AP staff. In most companies, the lack of sufficiently detailed documentation for matching business rules makes automation of this process difficult, thereby increasing the possibility of errors.
Excessive Use of PO-Receipt-Invoice Matching Tolerances
Many accounts payable departments use matching tolerances to reduce the effort to resolve unmatched items, but these tolerances are often set too loosely (to reduce effort), allowing dollars to be lost.
Duplicate or Incorrect Invoices
Vendors frequently generate duplicate invoices when an invoice has not been paid in a timely manner. Most companies can only track such invoices if a proper matching of invoices with POs is done.
Improper Account Coding
Account coding is judgmental and rules for coding are not well documented or otherwise established in most companies; this may lead to inconsistent coding across departments or manipulation for budgetary or for other purposes. This lack of consistency in coding can also make trend comparison for different expenses or revenues difficult or inaccurate.
Disappearing Invoices and Unapproved Invoices
Invoices that come directly from the vendor to a business unit manager or location other than accounting tend to get delayed or lost due to the unorganized paper work or filing systems, decentralized operations and multiple touch points for invoices. As a result, the exact quantum of invoices may not be known to accounting and therefore company liabilities may not be truly known or reflected on the balance sheet. This also leads to late charges and poor credit from vendors.
Approval of New Vendors or Update of Key Vendor Information
Careful controls should be placed on who can approve the establishment or revision of vendors to prevent fraud.
Difficult to Find Invoices and Checks after Processing and Document Storage is Expensive Paper
Documents are difficult to locate after accounts payable processing due to filling errors and are expensive to store and locate. Many companies store the invoice, a copy of the check and purchase order together for ease of retrieval, but this is extremely expensive. The lack of a proper electronic document management system also exacerbates the problem.
The findings of a recent study highlight the common errors and issues faced by the accounts payable department. They also stress on the manual, inefficient and error-prone nature of most accounts payable processes.
Please refer to http://www.outsourcinghubindia/AP-Best-Practices.pdf for the best possible solutions to these human errors and issues.
Article 3: Case Study
Leveraging an Outsourcing Solution to Reduce Accounts Payable Processing Costs
A well-known Canadian real estate developer based in Vancouver with proven expertise in constructing and developing high rise concrete homes
Accounts payable processing involving entry of invoices and generation of management reports.
Rising staff costs along with problems involved in expanding operations triggered the search for an outsourcing solution for their accounts payable team beginning with the entry of AP invoices.
• Project team of two junior accountants supervised by a senior accountant was set-up to service the stiff service levels (same day turnaround with 99% accuracy) stipulated in the service agreement
• Designed and implemented a comprehensive migration phase by preparing a standard operating procedure covering business, technology , process review and work-flow steps
• Two week comprehensive training program to familiarize staff with the software (Timberline) and the process
• Jointly implemented a document management system with the client to manage large volume of scanned documents
• Gradual transition from the pilot phase to the “live” phase ensured smooth scaling up
• Cost savings of 35% seen by the client in the initial phase. This is expected to increase to 50-60% as the client scales up the project
• Same day turnaround with 99.7% accuracy levels for a daily processing volume of 125 invoices per FTE
• Successful handling of complex invoices involving progressive invoicing, commitment invoices and multiple tax codes
• Client has planned off-shoring of the entire AP department over the next three months
To know more about how an outsourcing solution can help your business, please visit http://www.outsourcinghubindia.com/services.asp
- Contact Information
- Arvind Panwar
- Manager-Buisness Development
- PB Tech Impact Solutions
- Contact via E-mail
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