When it comes to bill payments, what’s the best way to document? Often, two responses come to mind: accounts payable automation and paper.
The two methods are vastly different in execution. While accounts payable automation digitizes the entire bill payment process and allows online payment such as ACH, many businesses still staunchly hold on to paper checks to document business transactions. These companies (and there are more of them than you think) run heavily paper-laden processes. Each invoice for payment is paper. It shuffles amongst desks for approval. Then, when approved, a paper check is printed, sent to the CEO to sign, stuffed into an envelope and mailed. Paper offers more complications. However, there’s still a level of perceived comfort for these companies that use it for AP.
But to say that paper is the best way to document the AP process is incorrect. Here’s why:
Paper isn’t as reliable as you might think.
Paper is pretty fragile. It’s easy to tear, stain and misplace. If your entire AP system relies on paper, you’re starting with substantial shortcomings. What happens if a disaster such as a flood or fire ruins your filing cabinets? What if an invoice is overlooked or misplaced during the review process? If you rely on paper, backup options are either non-existent or severely limited.
Paper obscures transparency.
A vendor calls to request the status of payment. In a paper-based system, it may be difficult to find the invoice, discover where it is in the review process and supply the answers your vendor needs. After all, the invoice may be on several different people’s desks. It may not have reached others that need to review it. If the invoice has moved forward for payment, can you quickly discover when the check will be cut and mailed? Most likely, you have to take a message, track the invoice down, determine the payment progress and then call the vendor back. That’s a lot of time –multiplied across many of your service providers – taken away from focusing on more meaningful tasks to support your business.
Paper slows down all processes it touches.
Shuffling paper to and from desks and approvers, following up, writing checks, getting them signed and mailing them – all of these processes take a while to complete. They incorporate many steps, many individuals and large amounts of time to complete. It’s simply not efficient in a competitive business environment.
Paper opens the door to multiple fraud opportunities.
While companies hold on to the notion that paper supports documentation, they ignore the security risks of paper and paper checks.
First, it can be difficult to maintain a separation of duties when paper is involved in the bill payment process. Businesses may default to allowing the same person who approves the check write it – opening the door for incomplete accounting best practices and potential fraud. Additionally, the approval process with paper is not audit-ready.
Second, your check stock can be stolen and used for fraudulent activities. The stock may be under lock and key at the office. But that doesn’t mean an employee with bad intentions can’t find the key, grab check stock and write and cash unauthorized checks. If the check stock is mishandled and left in the open, it’s relatively easy for someone to pick it up.
Finally, consider the method of transport for paper checks: the mail. All a thief has to do is get hold of are the banking account and routing numbers. Both of these are readily available on any check sent via mail – a mode of transport that can be easily intercepted before, during or after delivery.
It’s time to ditch the paper check and turn to a comprehensive accounts payable solution.
Here are the top five documentation benefits of an accounts payable solution such as Bill.com:
1. Audit friendly
Sure a paper trail can give you an idea of how a payment was approved. But is your paper trail audit ready? Bill.com tracks each and every activity related to payments and allows you to grant limited access so that auditors can confirm each step. In fact, this auditor access cuts the audit process by at least 30%.
2. All AP information you need at your fingertips.
All the information you need is only a click or tap away. The remittance information, invoices, contracts, previous payments and more stay securely stored online for each business. When you need to compare invoices, verify charges or read notes from previous reviewers, you can log in to Bill.com and access everything you need.
Automated workflow and permission levels in Bill.com ensure that only authorized individuals can access AP information. You determine who gets to see what – and Bill.com enforces it. The permission levels decide who can access Bill.com and what information they can see. The automated workflow sends invoices in predetermined pathways for approval. If Jane Doe isn’t authorized to review or approve documentation, she won’t be able to pull it up – even if she has an URL.
Most importantly, Bill.com complies with federal regulations to provide a bank level of security. That means your financial information is protected with the same stringency and security applied to banks that handle billions of dollars in transactions each year. All payments are made through the Bill.com account, ensuring that your company’s bank accounting and routing numbers are never exposed. Positive Pay assures that altered checks will not be paid.
4. Scheduling payments
You still control when your business delivers payments with Bill.com. Whether it’s ACH, credit card or another means, you select a date for delivery and Bill.com will take care of the rest.
5. Cut bill payment time in half
Bill.com vastly streamlines the AP process, which means you can accomplish AP in a fraction of the time that you normally spend on paper checks and processes. Automated workflows digitally shepherd the invoice from reviewer to reviewer. It automatically sends reminders when reviewers are slow to approve. It enables collaboration by letting reviewers share notes and questions about invoices. In the end, you spend less time on administrative work – that’s time you can invest back into your business.