The State of Accounting Workflows in 2022
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The State of Accounting Workflows in 2022

Peter Horadan is Co-founder and CEO, Lockstep®
Peter Horadan is Co-founder and CEO, Lockstep®

Peter Horadan is Co-founder and CEO, Lockstep®

In 2022, organizations, large and small are no stranger to automation. Today’s businesses thrive on automation at seemingly every turn. Departments across the organization have leveraged automation to reduce manual workflows and improve efficiencies. Sales teams have Salesforce to organize and automate prospecting, HR departments use automation for recruiting and benefits packages, even your IT team uses a helpdesk to organize and prioritize tasks. But your accounting team? It’s likely the only “automation” they have is a centralized AP email account built into Outlook and macro-enabled, Excel documents with dozens (or hundreds) of active formulas.

Accounting is perhaps the most existential part of any company. If you can’t record your transactions or produce financial reports, you don't have a business. While every department from sales to HR are getting great, new tools, the accounting team has been left behind.

Today’s accounts receivable (AR) and accounts payable (AP) teams are making do with a software stack that consists of emailing PDFs and spreadsheets back and forth to each other to be opened, read, and manually re-entered. At a time when the average AR or AP person receives over 100 customer emails each day, most teams spend over half of their day just responding to email inquiries due to the manual nature of the process. As a 50-year-old communication tool, email is not designed to solve your accounting workflow management challenges and Excel is a very, manual, time-intensive tool. Between email responses and the manual invoice and payment activities, the process is broken.

Because money is flowing in, many organizations view the manual processes as “good enough” and not a cost saving priority. What is often missed here is the fundamental increase in access to working capital that accounting automation brings.

We’ll often hear from teams that they don’t have a good way to monitor or track days sales outstanding (DSO) or develop accounts receivable aging. Why? Most often, accounting teams today are so bogged down with manual activities, that tracking or establishing these metrics are an afterthought.

Every business deal involves the sharing of accounting information. For example, if I'm a seller and you're a buyer, my AR balance should match your AP balance. If I've given you several invoices, those need to be in both of our computer systems. But the only way that accountants can share information is to email PDFs back and forth to each other, and then open them, read them, and manually enter them into their disconnected systems. Although seemingly archaic, it is a very unfortunate reality.

These disconnected systems can foster some serious problems at the heart of your accounting data. When follow ups are made through personal email, this data isn’t stored in a central location. With email as your primary tool for communication, balancing AR and multiple systems increases the chances for human error. Moving data relies on hand-entry and spreadsheets, and if you're balancing four different systems, it's quite easy to miss something costly, directly impact days sales outstanding (DSO) and in turn your cash on hand. And when your systems are disconnected, there is no easy way to see the big picture.

Too often accounting solutions are thought of as expense savings, but they haven’t been a top priority due to bigger expense savings available in other departments. We’ve found that this is causing a massive amount of working capital not being put to use. And that's because the sharing of accounting data between companies is incredibly inefficient – people are still using manual tasks to extract, format, and distribute vital accounting data that is at the heart of all business. And when you slow down access to accounting data, you slow down access to working capital.

  
​Many organizations view the manual processes as “good enough” and not a cost-saving priority as money flows in

   

 

AR automation uses data gathered from business transactions to reduce human involvement in time consuming business processes like data reentry as well as spreadsheet and document management. Customer history, profile data and account information should be used to automatically decide on follow-up timing, send alerts, and trigger email reminders. The time saved on manual tasks can be spent on higher priority AR tasks. In a time when customers are expecting omnichannel experiences, AR automation can help streamline and improve that customer experience.

How many invoices do you issue a month? What are the processes you have today to develop, track, store, send, and collect on each of those invoices? How much time does it take to each task? Now what would happen if you saw a 10% increase in sales?

Today’s manual accounting processes are inefficient, relying heavily on email and spreadsheets to manage and organize your accounting workflows. The business and economic changes from the past two years, have uncovered cash traps and cash leaks caused by use of personal and shared email addresses. It is time to digitally transform your accounting workflow. The results? You will collect faster, spend less, save time, and strengthen your reputation with customers and vendors. 

Peter Horadan is Co-founder and CEO of award-winning Lockstep®. The pioneer in Connected Accounting, Lockstep develops tools and platforms for fintech developers and accounting teams to automate workflows between the accounting systems that are at the heart of all businesses.