Today’s accounting teams rely on several disconnected, disparate systems to close the books. Accounting processes rely on the notion of being able to share accounting data back and forth. This is true not only with trading partners (customers and vendors), but with financial institutions and auditors, as well. And as a result, you have all these disconnected systems, where teams are using one-off solutions to manage accounting workflows.
“The AR process as a whole is one big system, and it needs multiple pieces working together in order for it to be successful,” notes Austin Riddle, Account Executive, Lockstep. “Automation goes beyond your ERP system, because once your invoice is generated, it becomes completely disconnected from the process.”
Disconnected Accounting Tools
These disconnected systems can foster some serious problems at the heart of your accounting data. When follow ups are made through personal email, this data isn’t stored in a central location. With email as your primary tool for communication, balancing AR and multiple systems increases the chances for human error. Moving data relies on hand-entry and spreadsheets. The onus lies with each team member to update the ERP system when the payment comes in. If you’re balancing four different systems as one person, but multiple people need to see your progress, it’s pretty easy to skip over one, and miss something pretty costly. Whether that be an email that comes in asking for a copy of an invoice an explanation of why they’re being charged a certain amount, these errors will impact days sales outstanding (DSO).
These disconnected systems can hurt cash flows and productivity. The whole AR process is really one big system, and it needs multiple pieces work together in order for it to be successful. When systems are disconnected, there is no easy way to see the big picture.
Automating Accounting Systems
For accounting teams, today, “automation” typically boils down to respective AP and AR email accounts and an ERP. But this is one subsystem to the whole AR process. After your invoice is generated, you download (if you have access) the invoice and email, fax or mail the invoice to your customer. Tracking and processing payments require even more systems and technology and then you have to manually reconcile payments in the ERP, matching invoices to payments received.
And what happens when a team member leaves, gets sick or goes on vacation? When your systems are disconnected, that often means that your team has been using email and spreadsheets to manage individual client challenges. At a time when the Great Resignation continues to impact organizations large and small.
When a team member leaves, you potentially lose this data while adding another (albeit temporary) inbox for the remaining team to monitor and manage. Building a system where a team member can come in and see what employees are working on is imperative. When people are out how is someone covering for them? Because they don’t have access to their colleague’s email, they have to rely on spreadsheets and ERP notes. But what if that last note was updated accurately? With over 150 emails a day, mistakes happen.
The extensive use of spreadsheets and email to manage receivables and payables is an indicator of just how much need for transformation remains. Automating a lot of these processes can decrease the chances of human error, inaccurate forecasts, and when someone in your AR department is away makes sure things don’t miss a beat.
Award-winning Lockstep® connects the world’s accounting teams to help them work better together. The pioneer in Connected Accounting, Lockstep develops tools and platforms for fintech developers and accounting teams to automate workflows between the accounting systems that are at the heart of all businesses.