Dysfunction is one of those modern terms that people toss around a lot. When I was an intern in college I worked at a museum. It was a very interesting mixture of old and new professionals (museums are like that). I was involved in a conversation that a younger woman (later 20s) was having with another woman (70s) when the younger woman told the old woman that she came from a dysfunctional family. The older woman had no idea what she was talking about. it took some time for the younger woman to explain it, and the entire situation became unconformable.
All paper regardless of its purpose has a certain amount of dysfunction. In Accounts Payable dysfunction can come from many sources that will cause the liability (invoice) to drop from visibility from the company’s finances. Here are 4 signs your Accounts Payable department is suffering from paper dysfunction.
Sign 1 – You are losing invoices. Not just losing invoices but losing a certain percentage of invoices. If your accounts payable department loses more than 5% of your invoices every month than your department is extremely paper dysfunctional. If you are losing less than 5% but more than 0% than you are moderately paper dysfunctional. 0% is the goal and it is achievable, but not with paper.
Sign 2 – Your invoices are miss-filed. If you are having to look for invoices in the filing cabinet and the invoices are not there. After a panic call to all departments you are unable to find the invoices, then you have paper dysfunction in accounts payable. If you have more than three of these situations each moth then you are extremely paper dysfunctional. If you have less than three but more than zero you are moderately paper dysfunctional. Unfortunately these situations tend to come up during an audit… it is also during an audit that your find the miss-filed invoices.
Sign 3 – Late fees. If your late fees represent over 1% of your entire invoices spend then you are extremely paper dysfunctional (and you can easily justify automation). Any amount of late fees from certain invoices on a consistent basis is a product of Accounts Payable Paper Dysfunction. I work with a lot of real estate companies and utility invoices are a problem. They are a unique type of invoice that has an extremely short timeframe and the late fees are impossible to argue out of. However when automated the time it take to approve a utility invoices is less than one day. Even with the most aggressive payment terms one day turn-a-round can solve a lot of late fees.
Sign 4 – The blame game. I also call this the “he said – she said”. If there is any level at all of finger pointing of where invoices are and the invoices can’t be found you have Accounts Payable Paper Dysfunction. I want to use the old saying when it comes to the blame game that there is your version of the truth, their version of the truth and then there is the truth. I hate the blame game. Usually it pit the accounting staff against the other departments or corporate against the field, and I am here to write that I have never found a clear winner in any of those battles.
Don’t be discouraged
If you have just found out that you have any level of Accounts Payable Paper Dysfunction, there is a cure. Each of the signs can be mopped up and cleaned up by Accounts Payable Automation. That’s the good news. I wish there was such a fix for the lady I used to work with at the museum.
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