How much of your company time is wasted on friction full processes, day to day admin, and complicated forms and emails? Here Richard Hurwitz, Tungsten Network’s CEO, provides CEO Today with three useful strategies for eliminating such friction.
Many of us are all too familiar with the impact that time-consuming administrative tasks can have on employee productivity and the efficiency of your supply chain. According to our recent research, finance departments are wasting 6,500 hours per year on clunky accounts payable processes. When multiplied by the average hourly UK pay (£13.65) this means UK businesses are losing as much as £88,725 a year resolving payment issues.
For Finance departments, such friction can be caused by many things and can take many forms. It can be anything from complicated admin taking up employees’ precious time, to enquiries from suppliers about the status of their invoices causing headaches on both sides.
To understand the scale of this problem, we surveyed approximately 500 businesses from all over the world, to understand what they consider to be the causes of friction within their organisations and help identify how they might be able to achieve improved efficiencies in their supply chain.
Our research found that, on average, employees are spending 55 hours per week doing manual, paper-based processes and checks; 39 hours chasing invoice exceptions, discrepancies and errors; and 23 hours responding to supplier enquiries about invoices. They also spend five hours on challenges related to compliance such as handling international taxes, and three hours tackling invoice fraud.
Some friction will be found in every business, however in order to see significant improvements in both quality and efficiency, the key is to take simple steps to remove this. Here are a few things to consider when looking at ways to improve your business’ procure-to-pay processes.
Focus on the bigger picture
Frequently, employees get distracted from core objectives and income-generating activities by urgent enquiries and laborious, paper-based processes. Andrew Grove, the former CEO of Intel, famously said: “There are so many people working so hard and achieving so little.” Sadly, this is an accurate description of too many business processes. These inefficiencies can drain the life-blood from companies and cause unnecessary friction that impacts the bottom line.
Witnessing workers distracted from the strategic focus of the company and spending an inordinate amount of time on menial tasks instead of ones which will accelerate the business is a big frustration for any CEO. Business leaders are all too familiar with seeing employees getting bogged down in paper and processes so freeing up employees’ time to focus on the ‘bigger picture’ is vital to allow any business to grow.
Identifying points of friction within a business is the first step towards removing them and in many cases, a targeted approach to automation can reap real rewards. Technology can do away with these cumbersome and menial tasks taking up precious time and instead boost productivity and efficiency.
For example, every day businesses waste time and energy by checking invoice documents received from a growing global supply chain whereas if they used an e-invoicing provider, it could reject incorrect invoices before they were even processed. So too, cross border traders can recover time lost to culling invoices for opportunities to collect unclaimed VAT. Digitizing POs and invoices automates these manual tasks.
While automation in Finance is gaining pace and machine-learning techniques that are currently emerging will have unprecedented consequences for financial processing and oversight, thoughtful leaders can do more to articulate a digital strategy to automate their procure-to-pay work stream. The benefits of doing this are far-reaching. For example, instead of teams spending time responding to supplier enquiries about when invoices will be paid, an online platform allows the customer to find out themselves in real time.
Make the most of your data
For businesses with staff based across multiple locations especially, another less obvious source of friction is inaccessible data – it is easy for duplications to occur and for too much time to be spent by different departments liaising with one another and questioning figures. Technology exists to support this form of collaboration at the touch of a button and provide organisations with a wealth of data on spending patterns. Yet so often, this unanalysed procurement data stagnates in paper invoices, instead of being quickly captured to highlight efficiency savings.
If all the data from past invoices is easily accessible, opportunities to identify variances that will target inefficiencies are more easily visible. If businesses aren’t tied up chasing invoices or receiving phone calls from suppliers doing the same, they will have more time to explore better business enablement opportunities with their suppliers and to coordinate growth plans with them.
It can be an incredibly difficult and daunting task for businesses to completely overhaul systems to make the switch to digital, but automating back office processes like accounts payables has proven to enhance operating efficiencies and to provide significant upside. This is what the digital dynamic is all about: easing friction and demonstrating that technology is an enabler of the buyer-seller relationships and corporate development.
Find out what’s causing friction in your business at www.frictionfinder.com