Even in this digital age, the majority of AP teams are only semi-automated or have no automation at all. This creates way too much room for error. It’s time to rejuvenate the finance industry. Learn 5 things holding accountants back from closing the books efficiently and confidently.
Do capacity issues stand in the way when it comes to carrying out day-to-day finance activities or taking on process optimization projects? Time constraints among you and your employees can be costly and negatively impact everyone’s mental health. The stress of month-end close is a clear cause of severe burnout within the accounting profession, which is directly impacting the accuracy and reliability of the close. If finance teams are unable to produce their best work, inaccurate and inefficiency month-end close reporting could destroy a companies’ reputation.
Even in this digital age, the majority of AP teams are only semi-automated or have no automation at all. This creates way too much room for error.
The majority of finance teams report spending unnecessary time processing invoices and making supplier payments every month. This extreme time suck is made worse by manually performing accounting tasks that should be automated, such as payment approval and execution, PO matching, onboarding new vendors, and payment reconciliation.
With this never ending pile of manual work, it’s no surprise that the “The accounting talent shortage is a systemic problem that is undermining the quality of audits,” according to Jack Castonguay, an accounting professor at Hofstra University in New York.
The SVB Financial Group’s collapse came just two weeks after a clean audit report. “More failures of companies challenged by serious risks that are not flagged by auditors are likely in the works,” said Castonguay. He continues expressing his concerns by saying, “With fewer students majoring in accounting and fewer getting the Certified Public Accounting licenses there are fewer people with core CPA competencies and backgrounds working on the audits.”
A shortage of qualified and passionate accountants is a burden across all industries, which hinders companies from growing and scaling and in the worst case scenario, can shudder doors of a longstanding business with a successful track record that spans decades.
It’s time to rejuvenate the finance industry, because accounting is cool—which is our motto here at Vic.ai. Continue reading to find:
5 things holding accountants back from closing the books efficiently and confidently.
(1) Extreme accounting burnout
According to FloQast, 99% of accountants are experiencing some level of burnout. The results of this survey come from a wide variety of finance professionals—Accountants, CEOs, VPs of Accounting, Staff Accountants, Controllers, Accounting Managers, VPs of Finance, CFOs, Auditors, and more. Just about everybody in the finance function is experiencing some level of burnout and exhaustion by being stretched too thin.
81% of those accountants have had their personal life disrupted by the month-end close at least one month in the past year.
If your personal life has been disrupted by close, what has caused it for you? This can be anywhere from manual processes, data discrepancies, invoice volume influx, not enough staff, etc.
Now that we know accountants are feeling burned out and rightfully so, why does this matter?
Accountants need to spend less time on manual AP entry and repeatable tasks that can be automated so they are freed up to execute their continuously increasing responsibilities and experience work-life balance. If automation tools began making waves in finance in the early 2000s, why are accountants still burned out?
(2) Legacy systems
According to Bain Capital Ventures, there are three decades of notable transitions of the CFO tech stack in the 21st century. The first wave, from 2000 to 2009, was triggered by SOX reform and tighter restrictions that necessitated the pre-2000 ERP modernization. Technology-driven processes matured during the second wave. From 2010 to 2019, tools proved to save finance teams time and money, but they also surfaced a whole new set of challenges - including an unwieldy amount of tech debt, lack of real-time visibility, and difficult data portability. A tool that accelerated during the second wave is robotic processing automation (RPA).
As the adoption of RPA has risen, finance teams have progressed toward their efficiency goals. But can RPA take them to the next level? According to Gartner, "RPA is limited by its adherence to rigid rules, and it can’t execute decision-oriented tasks." The use of rules and templates requires an increased number of people to maintain such a system, from exception handling and template training to double coding invoices in two separate systems for accounting data to be entered correctly into the ERP.
As you can see, even the tools touted as cutting-edge technology, such as RPA and digital invoice processes, have limitations that can't be ignored, which slow down the month-end close. "CFOs have allowed finance to rely too heavily on RPA, and they now need a defined strategy to scale automation with tactical and strategic goals," said the same Gartner study. Hyper-automation should be the end goal, which can be accomplished with the use of specialized artificial intelligence tools with machine learning components.
(3) Managing paper or invoice PDFs through email
Though many finance teams have moved from digital to paper invoices, Accounts Payable professionals are plagued by the manual management of digital invoices that are either lost in email inboxes or not automatically sent to the invoice processing software.
"PDF is the new paper" was a common theme expressed at the Fall 2022 APP2P Institute of Finance and Management Conference, where Accounts Payable directors and managers collectively shared their frustrations. The time spent sifting through inboxes for lost invoices is a task that can be eliminated with the proper setup. Then leveraging accounting AI can automatically perform AP entry for your team from header-level invoice data to line-items and due dates.
(4) Error prone manual AP entry and disconnected accounting workflows
There is no argument that the financial close means more in turbulent times like these. A successful month-end close is essential to a company’s growth and success, but the way that most businesses close their books is extremely error prone.
Many accounting departments rely on clunky, disconnected systems, spreadsheets, cumbersome cheat sheets to recall all the steps, and other manual processes to close the books and meet month-end close deadlines.
As a result:
• Critical data is not captured
• Captured information is inaccurate
• Systems are poorly integrated
• Information is not timely
• Decision-makers can’t access all the variables they need
Not surprisingly, these companies waste lots of time finding and fixing errors. As I've talked to several forward-thinking finance leaders recently, they all mention the limitations they're experiencing with industry-leading RPA and AP automation tools. A Vic.ai customer experienced these disconnected systems before implementing accounting AI.
HSB Real Estate, one of the largest HOA managers in Scandinavia, experienced these limitations with RPA. Their team of 300 accounts was double-coding data for each of their 1.5 million invoices into two separate systems. HSB decided to make the switch and let Vic.ai do the coding for them, resulting in significant time savings with an 83% decrease in processing time per invoice and 98% AI accuracy.
Now that HSB has hyper-automated its accounts payable function, they're saving about 60,000 hours per year!
(5) No real-time accounting insights for month-end close
Use these Accounts payable KPIs to help your measure speed & accuracy:
Total accuracy of AI
A measure of the AI and how accurately it reads and decides to code an invoice. Accuracy is determined by a user accepting or correcting the AI’s predictions. This is how your team nurtures the AI, and it will retrain itself based upon your input.
This is measured through:
- Predicting all of the fields on the invoice
- Confidence scores from header level to line-item level
- Historical data training increases accuracy
- User corrections vs no corrections
Average time spent per user per invoice
An individual performance metric for each AP processor. Whether you’re a team of 5 or 500, speed matters. Our customers see an average 80% drop in invoice processing time and a significant reduction in the number of invoices requiring any human touch at all.
How many days it takes to approve one invoice
Approval day is calculated as an average of all invoices. Higher Ground is a hyper-scaling, global school operator with over 80 campuses across the US and Asia offering at-home and virtual learning programs. This Vic.ai customer has diverse stakeholders across geographies, and faced challenges caused by using disparate AP tools across the organization, which was not syncing correctly with Sage Intacct, their ERP system. Additionally, their complex approval process consisted of 100 steps requiring time-consuming, manual follow-up and continuous accounts payable delays.
In April of 2022, their third full month using Vic.ai, their finance team reached 48% no-touch invoices out of the total number of invoices processed, then progressed to 60% no-touch the next month. Vic.ai’s Autonomous Approval Flows (AAF) has saved the company significant time. In contrast to their formerly time-intensive approval routing process, where invoices could take up to two weeks to get approved, the school operator is now approving invoices in one to two days with Autonomous Approval Flows.
Watch the full AP intelligence discussion: Eliminate AP bottlenecks: make invoice approval effortless
How many invoices on autopilot
An invoice is autopiloted when the AI is confident in its invoice predictions at an accuracy rate of 95-100%, which will automatically process the invoice with no human touch. Autopilot is very similar to “no-touch” invoices that don’t require Accounts Payable staff to make corrections. Autopiloted invoices not only transit the Accounts Payable process without the need for any human to review or code a bill, but they also trigger activities that in the past could only be handled manually, such as launching an approval process, or posting a fully coded invoice to an Enterprise Resource Planning (ERP) system.
How to reduce accounting burnout and speed up the month-end close
Review your current systems and the expenses they require to run. Your automation strategy might have been the best it could be two years ago, but rules were meant to be broken, and it's important to keep up with the times. Free up full-time employee capacity by taking automation further to reduce the waste of your valued resources and make the month-end close a breeze. Take the 4 thoughts below into consideration as you transform your finance operations.
- Rethink your current processes that rely on rules and templates
- Free up staff to focus more time on higher-value initiatives
- Leverage key performance indicators and seek new sources to measure them
- Update your automation strategy. Are you wasting resources from repeatable tasks?
If your AP process relies on rules, templates, and exceptions, it’s time to break the rules and push the boundaries toward intelligent accounting. By delegating AP-related tasks to advanced accounting AI algorithms, finance teams can reduce costs and stress less about bolstering their team to perform template training, manual AP entry and approvals, and exception handling.
Start now with the AP hyper-automation checklist and find out if you’re on track to give your employees the gift of time.
The evolution of PO Matching: past, present, and future solutions
The evolution of PO Matching: past, present, and future solutions
The must-listen-to AI and Generative AI podcasts 2023
The must-listen-to AI and Generative AI podcasts 2023