In 2021, quite a few finance employees and tax consultants still spend a large part of their working time neither on the actual steps of efficient accounting nor on the strategic planning of the company’s financial budget, but on dozens of annoying and, above all, manual individual measures that cost vast amounts of time, nerves and also money. But not only financial employees suffer from this chaos! Bosses, department heads and even their employees are also affected when processes such as invoice approval, purchasing approvals or travel expense reports drag on. As a result, financial processes are strongly associated with negative sentiments, above all stress and frustration.
We have asked our customers and our network and have compiled the 10 most frequently mentioned things that keep accounting from its actual strategic role in the company.
Time waster #1: Searching for missing invoices
How an invoice, e.g. for an online purchase of office supplies, reaches the accounting department varies greatly from company to company: Some companies are already almost completely digital and incoming invoices are sent directly to the accounting department via a central invoice receipt. In other companies, this process is still carried out in paper form – i.e. first printed, then countersigned and then sent to the accounting department by internal mail. However, the vast majority of companies lack a well-structured, error-free process for preparatory accounting. The consequence: documents are missing and the workload for the monthly or annual financial statements is unnecessarily delayed. The accounting department wastes many hours trying to find these receipts, invoices or other documents. And that’s just step 1.
Time waster #2: Reminding employees to submit invoices
If all invoices always found their way to the finance department in a timely manner, accounting would already be greatly helped – but the reality is different.
Employees who make purchases on behalf of their company often forget to submit invoices promptly. These then get lost in the e-mail inbox or in the paper filing system (or, in the case of restaurant receipts or sales slips, in their wallet). Especially since employees are increasingly able to work from home or remotely in general, the challenges here have grown. In the stressful workday, it is usually not until days or weeks later that the accounting department notices that there have been omissions. The responsible finance employee then has to go on a research tour: Who made the purchase? Where is the receipt? After all, everyone knows the principle of “no entry without a receipt”. The entire accounting process comes to a standstill and increases the stress level – because finance employees have to adhere to strict deadlines, e.g. for the advance sales tax return or the monthly closing.
Time waster #3: Collecting receipts in (digital) folders.
A common method operated by all companies that did not yet use a software solution for their expense management is to collect all invoices and receipts in a digital or physical storage location. From this location, they are later reconciled with the transactions on the company credit card or account. Depending on the complexity of the company structure (cost centers, departments, number of employees) and the volume of invoices to be processed month after month, this is a more than obscure and outdated system! To make matters worse, even the submitted invoices are not always free of errors. Sometimes the correct company address is missing, sometimes other mandatory information has simply been forgotten.
Time waster #4: Manual matching of transactions and invoices
Without technical support, e.g. OCR software (OCR stands for “Optical Character Recognition”. In this process, invoices are read by machine), invoices must be processed manually. Matching invoices to the corresponding transactions on the corporate credit card or corporate account is a process involving several steps. It can be compared to a game of “Memory” in which the matching pairs must always be brought together. Most accountants agree, however, that this is not really a fun game. At the latest when duplicate invoices appear in the system and the balance sheet is therefore no longer correct, every accountant wants to go to a remote island far away from the chaos of numbers and documents.
Time waster #5: Typing Invoice Data
Another tedious and immensely time-consuming manual step for the accountant is the typing of document or invoice data as part of preparatory accounting. Today, hardly any company works without a digital interface to the tax office. For the transfer of the monthly spendings into an accounting software invoices and invoice data must be digitized. But if this lacks software with OCR, the typing falls into the to-do list of the financial employee. Another well-known case is that lists of outstanding invoice approvals are kept manually and the corresponding invoice data is entered manually for this purpose. And even the best of the best have made a number error that has caused the entire monthly financial statement to falter.
Time waster #6: Invoice approval by e-mail or on paper
Every invoice issued to a business should be (in some way) approved before it is posted. This process is time-consuming when it happens through cumbersome, unstructured channels. According to a report on spend management by software company Coupa, it takes an average of 18.2 hours from the time an invoice is received until it is approved. It doesn’t necessarily have to be paid at this point.
Example: An employee in marketing needs a new monitor for his or her workstation. He or she requests this by e-mail, possibly already searches out one or more offers and waits for feedback and confirmation. Following the purchase, the invoice must be approved by a supervisor so that accounting can see that it is an approved purchase. It is not uncommon for something to get lost in the back-and-forth communication, or for an involved party to forget to respond and need to be reminded of his:her input. Concentration on the actual work is thus repeatedly interrupted and the workload is unnecessarily burdened.
Time waster #7: Preparation and execution of payments
If an open invoice is not settled directly by the respective (purchasing) employee via company credit card or another means of payment of his or her employer, this task goes to accounting. Here it must now be checked: When did the invoice arrive, is it correct? When does it have to be paid – e.g. to avoid overdue fines or to avoid losing cash discounts? To which department, i.e. which cost center, must it be assigned? Which employee should be contacted in case of further questions? It is also not uncommon to lack an overview of which invoices have already been paid (and via which means of payment) and which have not. It is also not uncommon to lack a clear, digital overview of which payments are due and when. And what would be so useful: This is how to conduct strategic cash management (or working capital management), and pay invoices only when they are due, if possible. And an addendum: If an employee makes the payment him- or herself, he or she must also remember to submit the invoice. Does this always work reliably? You already guessed it: No.
So quite a lot of checking has to be done, with most of the time not necessarily falling on the relevant checking steps (e.g., was it delivered correctly, what is being charged?) but the avoidable research around it.
Time waster #8: Coordination with the tax consultant in case of queries or problems
Companies without their own finance department usually have an experienced tax advisor for their internal financial processes, who takes care of the timely processing of monthly financial statements and the like. However, they are of course not sitting “in house” and also represents a number of clients, so they are very busy. Usually there is a lot of unnecessary back and forth (and back, and forth…), because communication takes place via e-mail, telephone or even fax/mail instead of via a central platform. The tax advisor does not know the operational business or does not know it well enough to know, for example, which cost center or which G/L account is the correct one for each invoice, which is why this has to be noted manually in some cases. (the good old account assignment stamp, do you still know it?). Another time waster often comes from the fact that companies do not complete the preparatory accounting properly, but leave the final document check (is everything there?) to the tax consultant. If there are then queries or something is missing, the internal search has to be started again.
This leads to unnecessary delays at many points – even if both sides have worked to the best of their knowledge and belief.
Time waster #9: A single corporate credit card for everything
The classic corporate credit card is usually still the payment method of choice in small and medium-sized businesses. Because at first glance, it seems easy to use – as we know it from private use. But in the corporate environment, the disadvantages quickly become apparent: With a single credit card, it is almost impossible to keep track of all expenses – because the statement always arrives in the accounting department at the end of the month. Delays also occur in everyday life when employees first have to apply for access to the card data. And then it is again the responsibility of the purchaser to ensure that the purchase can be allocated to him/her or his/her department by providing a correctly issued invoice promptly afterwards. Complicating matters:
Card data, which are possibly also shared by email or telephone, are also an increased security risk!
Time waster #10: Reconciliation between budgets and expenses via Excel sheets
The good old Excel spreadsheet is far from obsolete. In companies that have not yet implemented a software solution for their spend management, they are still filled manually with data and formulas to get a vague overview of expenses and budgets. And in most cases, it is only at the end of the month that it becomes apparent how much money has actually been spent.
Entering the data is one of the biggest time-consumers and last but not least, a wrong click or a carelessly moved cell can throw the whole spreadsheet into chaos. In view of the fact that much better and, above all, simpler solutions have been available on the market for several years, the “Excel system” has long since had its day. But what keeps companies and their finance departments with their dusty processes? Is it simply the fear of change and the belief that they have to stick to things “that have always been done that way”? According to a study by the University of Munich, probably the biggest hurdle is the concern that digitizing processes that have not been optimized in the first place will not bring any improvement.
The path to solving your financial frustrations
Simply put, if you recognized yourself or some of the workflows in your company while reading this article, you should know that every time waster mentioned is avoidable! Think of all the anger and bad vibes the receipt chaos and accounting stress has already caused you and your colleagues. Wouldn’t it be fantastic if things could be different? But how?
The answer is: with a holistic software that takes care of all your internal financial processes, provides clear but flexible workflows for purchase requests or invoice approvals, and always reminds everyone involved in purchases about receipts and pending approvals, so that really nothing can be overlooked. This makes preparatory accounting a breeze. This is especially a great added value if your colleagues work from home and can conveniently transmit invoices/receipts digitally.
How you can additionally get a much better overview of the expenses of your departments with virtual or physical Mastercard debit cards we explain to you here or also personally in a non-binding free demo of finway.