A fundamental problem with current “Financial Management”

Nobody is going to argue that good decision-making takes place when we have all the relevant information, immediately to hand, influenced by our experience, PRIOR to making the decision. So, there can be no argument that good financial management works the same.

For business, once a contract has been agreed or a purchase order placed, the following transaction processing is simply accounting, the diligent recording and processing the resulting documents, (i.e. the order and the invoice), to meet all the statutory requirements in a timely manner.

So, what is the “real-time” information that finance provides to the budget holders – the people making these financial decisions – that aids them making the best informed financial decisions?

But first, let’s first understand our workforce. Every one of them is fully conversant and most highly skilled in managing their own money, making a purchasing decision, then researching the market to get the best value. Having found the desired item, purchase it online and complete the transaction using many payment options. All of which is electronically confirmed in a few minutes. They achieve this through their smartphones, tablets and home computers, without a second thought and it can be easily argued that they are far more disciplined and diligent about how they spend their own money, compared to corporate cash. This is a skill set that exists with almost every employee and it is time to make use of it.

To quantify the fundamental problem and redefine the meaning of “good financial management”, let’s list the information your budget holders and their staff don’t currently have available when making these financial purchasing decisions. They simply do not have any visibility or easy access to real-time supplier information:

• Turnover and trends
• Any purchase invoices and the line level information within them
• The status of an invoice from receipt through approval, query management or whether it has been paid
• Budget information based on what has been purchased, whether against a project or the corporate budget

The only information they receive is a paper invoice that needs approval next time they are in the office and a set of management accounts that are 5 to 15 days out of date when it is delivered and up to 6 weeks out of date before it is updated.

Budget Holder Management is designed to resolve this problem, because, for most organisations, the budget holders have little to no relevant information on their spending at the time they make the decision. This document covers the first step of Budget Holder Management, delivering all the information in real time to the budget holders to enable them to make better, more informed financial decisions and by doing so, become better financial managers of their budgets and projects.

Budget Holder Management Step 1:

• All purchase invoices are captured at source, irrespective of their source (PDF/paper invoices / other)
  • The invoices are converted to data, with the PDF attached delivering 100% document management “out of the box”
  • The approval process (single and multistep) is undertaken online, from any connected device, including dedicated mobile Approval App.
    • Who’s got it
    • Who else needs to approve it
    • Whether under query and who is managing the resolution
    • On last approval, it is in the accounts ready for payment

This simple change automatically delivers full real-time access to the following information to every budget holder that is relevant to their respective roles, whilst finance retains 100% oversight of everything.

• Supplier turnover
  • Every invoice – searchable on all the information within it
    • Where it is in the approval process / under query
    • If approved and in your accounting software, whether it has been paid
• Budget and project Management
  • Updated from the moment the invoice is received for processing

For finance, the benefits are considerable

• The removal of paper saves at least 50% of all of the time required to process and invoice for payment
• No invoice can ever be “lost” and all duplicate invoices are captured and dealt with to remove double payments
• The approval process takes a fraction of the time, ensuring that suppliers can be paid promptly
• Every conversation with the budget holder on their suppliers and budget/project statuses is achieved based on identical information
• There is no requirement to keep any of the paper invoices, not only removing the filing process, but also freeing up the floor space for more productive use
• Accounts payable staff can perform much more productive and valuable tasks than shuffling paper, potentially reducing the constant churn of staff in this role
• The budget holders (board of directors) will be delighted with the change because it saves them so much time.

The fundamental problem with the current understanding of “financial management” is that, for everyone outside the accounts department, it means a tedious paper-based approval process and reporting that is always out of date and of little help running their business unit.

Good Financial Management is where the budget holders have all the information immediately available to make the most informed purchasing decision BEFORE they make it.

How much does this cost?

To achieve all of this is both simple and inexpensive.

In fact, emailing a PDF invoice to our portal (whether the PDF is sent directly from your supplier or the paper invoices are scanned), putting it through the appropriate approval process ready to be posted into your accounts is 100% free and takes between 15 minutes to an hour to set up, based on the number of people involved and the number of different approval processes required.

No catch, no credit card details, no limit on the number of users or the number of invoices processed and no timescale restrictions. It is called CompleatInvoice Starter and you can register for it HERE.

Why FREE?

Simply because it removes the last possible excuses of every finance department (money and available time) to cling onto their archaic paper-based processes and from our experience, every member of the board will be in favour.

Our belief is once you make the change and realise what is possible, you will then check out what else we can do.