Do grumbles in your finance department betray too much reliance on paper?
You can tell a lot about what is going on in an organization by listening to what people are complaining about. In this post and the next I am going to highlight the typical grumbles you might hear in the finance department if there is still too much reliance on paper and manual effort.
These issues typically affect order to cash tasks – sales order processing, invoicing, credit control and cash allocation (or cash application). These activities are focused around turning customer orders into cash – both cash in the bank and cash that is correctly accounted for on the balance sheet – as quickly as possible. Despite its importance, however, the order to cash process remains hampered by manual, paper based processes that are slow and error prone, impacting cash flow and efficiency.
I will start by looking at the sales order processing and invoicing functions, giving examples of typical complaints you might hear within those teams.
Typical grumbles to listen out for in sales order processing
Here’s what people working in sales order processing will often be heard complaining about:
- “We just aren’t able to process customer orders quickly enough at busy times.”
- “Order entry errors lead to customers receiving the wrong goods – and then ringing up to complain.”
- “Are we really still re-typing information from paper?”
- “Printing problems at the warehouse are delaying shipments – leading to yet more complaints.”
If these comments sound familiar, then it might be time for your organization to consider automating the document management side of sales order processing. This approach can help you turn round customer orders faster, with fewer errors, by eliminating much of the manual effort. Information is captured electronically from customer orders received on paper (which are first scanned) or via email, from your website, mobile apps and so on. Critically, this captured information is used to automatically create a sales order in your SD module. At the same time you can use SAP workflow to swiftly authorize discounts and promotions.
Automation further down the line ensures that pick lists and delivery notes are sent quickly and accurately to the correct warehouse location to drive faster fulfilment – and in the event of a printer failure the shipping documents can be rerouted automatically to another printer, or sent electronically, for example to a handheld device, to prevent shipping delays.
Typical grumbles to listen out for in invoicing
When it comes to invoicing, many of the complaints relate to relying too heavily on paper invoices:
- “Printing and mailing invoices is costing so much – and it’s just not environmentally friendly.”
- “Slow postal delivery and ‘lost’ paper invoices are causing too many delayed payments.”
- “Our customers are defecting to competitors because they want electronic invoicing.”
Many organizations face these kinds issues but hesitate to introduce electronic invoicing because they worry about the cost, or risk of making changes to their core SAP applications. But today it is very easy to quickly add a multi-channel delivery capability to your existing SAP finance applications without causing disruption – so that invoices, statements and related documents can be delivered promptly via email or online self service. You can avoid touching the SAP applications at all because the electronic invoicing system sits outside of the SAP finance modules and manages the whole process, including both electronic delivery and printing (for those customers who still want paper). Existing invoice output from your finance application – originally destined for printing – is intercepted, reformatted for electronic delivery and then delivered according to customer preferences and your own business rules.
As well as cutting paper and postage costs and helping to improve cash flow (by eliminating the ‘lost in the post’ excuse for non-payment of invoices), some electronic invoicing solutions also improve service further by allowing customers to access their invoice data online – alongside the invoice documents – and then upload it directly into their own financial systems. This is welcomed by the customer’s accounts payable department as it cuts out additional manual effort – and is a great example of how electronic delivery can go beyond a simple online representation of paper, to provide additional value throughout the business process.
I will return to this theme in my next post, when I will be discussing credit control and cash allocation/application, highlighting the problems a lack of automation can provoke in these areas, and proposing some simple ways of replacing paper that will make a big difference to the finance team.