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PoD + automation improves cashflow

ON average, an accountant spends 25-30% of their time looking for documentation to resolve queries, or resending documents to customers to ensure payment is made. By utilising technology to automate the control and distribution of invoices and linked statements, companies can expect to achieve a 10 to 35% improvement in their monthly cash collections. Over and above this is the 25% of time (a whole week in a month) saved when there is no longer a constant need to search for documentation.

The importance of proof-of-delivery (POD) management is a frequently overlooked or misunderstood aspect of keeping a business running smoothly, and cash flow consistent. Finance departments typically refer to a ‘three-way document match’ process to finalise a transaction in the system. However, this concept is not widely understood by the greater business community.

This is according to Christopher de Zeeuw, Managing Director of Capisol Software, a provider of integrated and automated document management.

Three-way document match

The documents involved in the three-way match are purchase orders, goods receipts and supplier invoices. If data on all three of these documents is not a 100% match, it will negatively affect payment being made.

“The procurement process typically starts with an order being raised in the system, which is subsequently approved by management prior to being sent to suppliers. Approval of the initial order effectively amounts to the approval of payment to be made to a supplier for the order,” he adds.

The process culminates with the finance department, where all three documents (comparing quantity and price) are matched, to ensure that the amount due agrees with what was received and is also consistent with the original purchase order.

Eliminating reasons for delayed payments

“Automation does not only entail scanning in the signed POD and storing this manually on a drive. In order to achieve value out of the automation, one must ensure that the scanning process is efficient, designed to remove human error and – most importantly – that there are exception reports. These reports must be easy to extract and up-to-date at all times, so that the finance department can identify any missing invoices or PODs,” he points out.

For the ultimate level of automation and best cash flow impact, it is recommended that all invoices are automatically distributed in a SARS-compliant format to one’s customers’ finance departments when the transaction takes place. From the invoice, the finance department must be able to drill down to the signed POD – without having to request a copy of the document.

“This simple step eliminates any reason or excuse for delayed payment, and ensures that the finance department has all the required documents to process the transaction. Furthermore, if there is a query, this can be raised within the same month, a possible credit passed, and the invoice still paid within terms,” he adds.

Automation considerations

When selecting the level of automation to be adopted, companies must ensure that their document management partner is trusted in the industry and can provide top-level security. The following guidelines will help companies to gain the most from document automation:

  1. Automate where possible:
  2. Reduce human error:
  3. Have a single Master of Data:
  4. Exception reports:
  5. Link documents, and
  6. The system must be user-friendly: It must have the ability to quickly search and find a document and resend in one single step.
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