Transitioning to an automated accounts payable system impacts company culture and the role of employees in the AP department in a variety of beneficial ways.
Studies show people spend 10 to 20% of their work hours on dull, repetitive computer tasks. And at least 13% of workers find such chores to be a waste of time. What if there were a way to reduce those uninspiring hours and replace them with more meaningful work, all while increasing efficiency and accuracy? An automated AP system can help.
Additionally, the same research shows 50% of companies spend $5 to $25 per manually processed invoice. Automating the accounts payable system can reduce these costs as well.
Switching to accounts payable automation typically saves AP employees substantial time and effort, but the automation process can come with challenges, too. Effective change management is critical for a smooth transition. Below, we will offer tips for change management and accounts payable automation best practices to ensure easy and effective implementation of an automated AP system.
Challenges of Transitioning to an Automated AP System
Traditional AP systems have several drawbacks.
- Cumbersome or outdated invoice-processing systems: Often, those systems come built-in as part of the enterprise resource planning tools, or ERP, and are not always customizable or user-friendly.
- High volume of tedious manual data entry: The high amount of manual work can lead to data-entry errors, difficulties in matching invoices with purchase orders and more. In a recent study, 88% of accounting spreadsheets audited contained data-entry errors. These issues can lead to delays and frustrated suppliers.
- Costs: The costs for envelopes, check printing, paper and stamps quickly add up.
- High risk of fraud and theft: Using paper checks also substantially increases the risk of fraud because it is easy to intercept, duplicate or reroute them. For this reason, moving to an automated system adds a vital layer of extra security.
- Limited data: Manual processes provide a limited amount of data for AP departments to work with. With an automated AP system, on the other hand, companies gain insight into their AP data. They can use it to identify trends over time, locate areas where they need to make performance improvements and develop concrete strategies for the future.
In light of this information, automation provides the attractive options of accelerated invoice approval, increased efficiency, less data-entry labor, lower costs, fewer errors, reduced risk of fraud and more available data.
However, organizations may resist switching to an automated AP system for a variety of reasons. These can include the absence of a budget, perception that current processes are working smoothly, a lack of information about available automated solutions, lack of executive buy-in and a belief that the change would offer little return on investment.
Implementing an automated AP system can also be challenging if companies do not take the right steps to facilitate a smooth transition. Implementation can fail for several reasons:
- The change lacks management’s support.
- Employees are resistant to change.
- The transition is not timed well.
- Employees do not receive proper training on the new software.
A sloppy or failed transition to an automated AP system can have severe consequences, including damaged relationships with vendors, credit holds, or even your vendors refusing service after delayed or missed payments. Effective change management helps overcome these challenges and create a smooth transition to an automated AP system.
According to a recent McKinsey report, it’s possible to automate up to 45% of work activities across a range of industries using existing technology. Though few jobs lend themselves to full automation, about 60% of occupations could see 30% or more of their activities automated. So one challenge involved in transitioning to an automated AP system may also be employees’ fear that these systems will lead to a reduced number of jobs in the future as automation takes over more of the workload.
Employees may also worry the new system will be challenging to learn or will create more work for them. They may also resist the change because of the natural human impulse to stick with what is familiar and comfortable.
Managing the transition to an automated AP system can often mean addressing challenges in a variety of areas.
- Switching from a paper format to an electronic one: Dealing with digital documents can be quite a different experience from dealing with paper documents.
- Integrating different technology: Technology upgrades can present challenges if employees do not receive sufficient instruction to feel confident with the new system. Challenges can also come up if the new technology does not integrate seamlessly with the company’s existing technological infrastructure.
- Providing proper training: It’s essential to give employees comprehensive training to set them up for success with the new system.
- Addressing company culture: It’s also crucial to make sure the new system fits within the company culture. Taking proactive steps to cultivate a culture of flexibility, a sense of job security and willingness to engage with new things can help smooth the way for a successful transition.
- Formulating clear benefit explanations: Employees are more likely to accept the transition to an automated AP system if they understand what benefits the change will create.
What Is Change Management, and Why Is It Important?
Change management refers to the approach an organization takes to prepare and support its employees during times of institutional transition. It focuses on the people and culture of a company during a change and takes a systematic approach to better facilitate the shift.
Despite its reputation as the “soft” side of change, the human element can be more complicated to manage than the “hard” logistical side. When change occurs, people have to learn to work differently, and that’s not always an easy task. According to a Forbes survey of over 500 executives, more than 85% of them said they believe effective change management is critical to their success during disruptive times. However, 38% of survey respondents also said their employees view change as too much of a threat.
Helping teams learn to lean into and embrace the change is integral to the work of change management. When executed correctly, change management leads to financial gains by helping optimize team and individual performance throughout the process.
Change management is valuable for several reasons.
- Change is disruptive: In any business, change leads to leads to disruption of normal operations and introduces elements of the unknown. Any “X factor” often creates apprehension about what will happen next and whether outcomes will be positive or negative. Employees may fear failure or loss of control. Proper change management techniques allow managers to direct the flow of operations and channel employees’ questions and ideas productively.
- Change is hard: According to a study by Harvard Business Review, more than 70% of business transformation efforts fail. Targeted change management techniques can help businesses give themselves a fighting chance of success during transitions.
- Change management opens lines of communication: During transitions, honest communication between managers and team members is vital, both for the transfer of information and for employee morale. Effective change management maintains two-way lines of communication so employees feel heard, engaged with and supported.
- Change management sets the tone for institutional transitions: During transitions, appropriate leadership is critical. Successful change management uses leadership strategies to set a tone of competence and openness for other members of the organization to follow.
- Change happens at the individual level: No matter what new protocols and policies are in place, change cannot take place if individuals are not on board. Strategic change management policies help make sure individuals have the tools they need to be active components of the change.
- Change management is crucial for business success: Change management affects many different aspects of business, from employee roles and interactions to resource management to the success of new implementations. Managing change is key to the success of new ventures and a business’ growth and longevity.
In the context of AP system automation, change management plays a pivotal role, especially in light of the increased role of technology. Change management with automation can help employees understand the new systems and how their roles have evolved. It can also help reassure employees their jobs will not become obsolete with the advent of AP automation.
How to Facilitate a Successful Transition to an Automated AP System
According to the U.S. Government Accountability Office, the quality of automated accounting systems largely depends on the effectiveness of internal control.
Internal control has two components: general control and application control. Application control refers to the data processing that takes place within the application software, whereas general control applies to information systems and the end-user environment. This last element is particularly critical because it refers to how the users of the new system — AP department employees — engage with and embrace it.
Below are a few concrete steps companies can take to facilitate a successful transition to an automated AP system.
1. Anticipate Changes in Company Culture
Before beginning the transition, the company should consider how the change will impact company culture and the roles of employees. Expecting changes in the company culture helps managers prepare employees for their new roles and shifting interpersonal dynamics.
2. Establish the Goals and Benefits of the Change
Often, employee resistance to change results when employees cannot envision how it will benefit them or the business. It is essential to establish clear-cut goals for how the change will be positive for the AP department and the entire company.
3. Communicate Early and Effectively
Be open with employees about when the change will roll out and the steps that will be involved in implementing it. If you share the implementation plan early, employees can prepare and will feel more involved in the transition.
4. Involve a Seasoned Process Worker
Get an experienced process worker involved in the roll-out — someone who knows the process inside and out. Some companies try to try to build process flows with knowledge that comes only from IT people and process managers. They always miss something because they are not involved in the process daily.
5. Provide Adequate Training
Provide education and training to prepare employees to use the new system and take on any new roles or responsibilities that will be on their plates. Provide training sessions early enough that employees have time to ask questions and become familiar with the new software before it rolls out. Training and education should also continue into the implementation process. Even though you still have a business to run, you have to make training a priority, especially when a Vanguard employee is on-site to help.
6. Send Clear and Brief Updates
During the transition period, provide updates to employees about new changes. Keep these updates short and to the point, so employees don’t feel overwhelmed with information, but have the background they need to keep up during the implementation process.
7. Be Receptive to Employee Feedback
Allow open channels of communication for employees to submit feedback about the implementation process or questions they may have about the new software. Employees can identify problems or areas for improvement, so you can better adjust job roles and task delegation.
8. Create a Culture of Continued Growth
Sustain the change by continuing to hold ongoing training to improve and refine your accounts payable process. You can also encourage employees to set and work toward personal goals for their performance with the new system.
9. Give It Time
Run the system as implemented for a month, then build your list of changes. Don’t make snap judgments and request changes immediately. We find that after a month, the list of requested changes is usually drastically different. Take your time and work patiently through the growing pains to narrow the adoption window.
Benefits of Effective Change Management in Accounts Payable Automation
When companies facilitate AP automation successfully by considering employee needs and company culture, many advantages accrue. Strategic change management of AP automation comes with several benefits for businesses.
- Better use of employees’ abilities: When they have less time dedicated to manual data entry and other repetitive tasks, employees can maximize their skills.
Improved employee satisfaction: When employees can spend less time on basic tasks, they will enjoy better job satisfaction. An automated AP system will also streamline their daily tasks and make their jobs easier.
- Improved client satisfaction: An automated AP system will provide a better and more efficient experience for clients and boost client satisfaction. Improved speed and accuracy and a dramatically reduced likelihood of errors all lead to better client outcomes.
- New opportunities for growth: When employees are not wrapped up in fundamental AP tasks, they can focus their attention on new initiatives to promote business growth. A more efficient AP system may also enable your business to take on more clients.
- Enhanced efficiency: One of the most significant drawbacks to traditional AP systems is the amount of time employees must put into their work. Effective change management in accounts payable automation helps make the process more efficient and saves employees valuable time.
- Centralization: Another drawback of traditional AP processes is their decentralized nature. Typically, invoices come in from a range of places. As a result, AP departments must often deal with many exceptions and discrepancies with different types of invoices. This system leads to time delays in review, approval and processing. An automated system helps centralize and streamline the process.
Automate Accounts Payable With Vanguard Systems
Vanguard’s automated accounts payable solutions can integrate with any existing system for a smooth and seamless transition. When implementing AP automation software, Vanguard can provide guidance and expert advice for a straightforward, successful roll-out for your entire AP department.
We’ve been in business for over 30 years, and over that time, we’ve developed a reputation for smart, dependable automated solutions. Our automated systems help companies eliminate lost paperwork, reduce errors, increase savings and boost employee productivity and happiness, as well as client satisfaction.
Contact us today for more information about our AP automation solutions or to schedule a free custom demonstration.