Where Invoices Go To Die
Many business managers quietly admit that they are under continuous pressure to cut administrative expenses. Their admonitions often remind me of one of my early employment experiences.
Years ago, I worked for a large media company and in my role, I dealt with many of our vendors and subcontractors. So, when our accounting department was not paying a bill, I’m the one that felt the heat.
One day, I received a frantic call from the owner of a small company that had hired extra people to complete a job we had contracted. His back was to the wall and he could not pay his people. Why? Because we had not paid him. I gathered his paperwork and walked down to the accounting offices to investigate.
Down in the bowls of the back office, I discovered two things.
First, the company policy not to pay any invoice until 60 days had passed was explained to me. Also, I discovered that this man’s perfectly legitimate paperwork was sitting on the desk of the right person. She simply hadn’t touched it. She had the invoice and backing documentation with appropriate signatures. In fact, no one disputed that we owed them money. The vendor had done the work as requested and done a fine job. But, still, we wouldn’t pay it, and by the time we did, the poor guy had gone out of business.
My company chugged along, but the event made me wonder… what else was going on down in that accounting department that was harmful. That we drove a legitimate business to bankruptcy was of no benefit to us; we owed them money and we paid it eventually. There was harm to our reputation, and possibly other vendors granted us less favorable terms based on our reputation.
Where 30 Days is The Standard Unit of Measure
The larger problem, however, was the SOP of every accounting department I have ever encountered. My observation has been that these departments deploy an overabundance of caution and a deep reliance on paper to drive a business process forward. Managers tolerate without question business practices that soak up vast quantities of time; standard terms of net 30, 30-60-90-day agings, payroll every two weeks, and waiting for checks to “hit the bank.” If time is money, these departments waste a lot of it.
Two generations back, businesses the world over introduced robotics and automation. We’ve used intelligent machines in construction of complicated products like automobiles and heart values. And yet, walk into any back-office anywhere in the world and you are likely to see stacks of paper and teams of people manually reconciling disparate events to that paper.
Cut Admin Expenses AND Let The Paper Go!
It does not have to be this way. The time and money-wasting manual processes that are standard business practice can finally be abandoned. If the available data confirms a business process has been completed, there is no need for further documentation. If that confirmation is captured in a shared ledgering system that all relevant parties can see but no one can change, the payment can be automated. Finally, you can let go of all that paper!
Data Gumbo is a blockchain-as-a-service company that can drive the costs out of the back office. If your back office is a source of uncertainty and delay, we can automate your contracts to keep your partners honest and happy. Your customer will likely embrace an automated contract execution system with agreed-upon performance measures that are 100% verifiable and fully backed up by the system. They will happily pay you faster.
Don’t let the back office consume time and resources with business practices from another era. Let Data Gumbo show you how to make the back office a high tech, friction-free center of insight and automation.