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How Colleges can benefit from paperless accounting

Apart from shrinking your carbon footprint, what other benefits are there for Colleges that move to electronic based financial management? As well as examining the environmental effects, Simon Kearsley, CEO at accounting software vendor, Symmetry (www.symmetry.co.uk) explores other reasons why going paperless can improve processes, save time, increase efficiency and contribute to CSR (Corporate Social Responsibility) efforts.

With widespread cuts in FE funding this year, the sector must focus on how they can make better use of their limited resources and look at ways in which they can reduce waste and improve efficiency. One area that is ripe for modernisation is the area of financial management. Many Colleges still rely on a paper-based culture that not only harms the environment but also leads to unnecessary time and cost in both printing and travel. Here are the areas where introducing electronic based accounting can not only improve your carbon footprint but deliver significant efficiencies and cost-savings.

Reduce time including bottlenecks of authorisation chains

Approving purchase orders or invoices can often involve multiple individuals across an organisation in the sign off process. When paper-based documents are used, the whole process can be delayed due to sending originals or copies through the internal/external post or simply because a Purchase Order goes missing or sits in an in-tray for days or weeks waiting for a signature from a busy finance professional. This whole authorisation procedure can easily be automated by relying on electronic based documentation that can be emailed directly to recipients who can also be chased with alert reminders.

Drive down delivery costs

According to statistics, an organisation can save up to £1 per document if it is sent electronically rather than via the post. This not only takes into account the postal charges but also the stationery, labour, printing and waste disposal costs. For Colleges that are sending out hundreds or thousands of invoices or statements every month these costs can soon mount up. By using electronic based invoicing these costs can be removed.

Save space by storing financial documents electronically

Premises represent probably one of the biggest overheads, yet old-fashioned filing cabinets still occupy a significant proportion of the College campus. By electronically storing and archiving finance documents such as invoices, purchase orders, supplier statements and/or delivery notes you can free up storage areas for more desks or even consider moving to a smaller, more cost-effective site.

Better use of human resources

Whether you’re processing an order or managing the receipt of an invoice, if you rely on a paper-based accounting system then someone in the finance department will have to spend hours inputting data, photocopying, faxing, posting or retrieving documents. Instead, modern document management technology can also save considerable management time. You can scan in invoices using OCR (optical character recognition) which identifies the supplier by reading the VAT or company registration number. Alternatively you can use a barcode system which tags the scanned document so it can be easily retrieved afterwards and tied up to the relevant records in the core finance system.

For processing purchase orders there is also a substantial amount of work created for the finance department in chasing approval for expenditure or making amendments to orders. By using a paperless approach, the finance department can escalate the approvals process electronically and can even devolve purchase order creation to individual departments.

Improve supplier relationships and avoid disputes

With paperless billing and payment you can promote better relationships with suppliers and potentially secure better terms or discounting. You can also remove the time taken by finance staff to manage suppliers who are chasing monies. You should also be able to resolve any disputes quicker because you can find the relevant details on the system without having to fish through numerous files.

Support remote/flexible working

With all documentation held centrally on a network, there is no reason for certain members of staff to be physically present to authorise purchases or payments, making it easier to support a flexible or remote working policy. Likewise if employees are on the move they can send back approvals from their PDA.

Add value elsewhere

By easing the burden on the finance department, skilled resources can be used elsewhere for planning, strategy and budgeting, rather than wasting time on administrative tasks that add little value.

As you can see there’s a lot more to a paperless operations strategy than fulfilling environmental obligations: it can help you to become more productive and efficient with less human and physical resources. If you’re considering how you can reduce the reliance on paper and want to reap the additional benefits that electronic accounting can bring then it may be easier and more cost-effective than you think. On average most Colleges that introduce electronic-based accounting procedures find that both finance and non-finance staff welcome the change and typically see a return on investment within six months.

Mini Case Study

One of the largest providers of education & training in the Midlands introduces e-accounting to deliver greater flexibility & efficiencies

North Warwickshire & Hinckley College (www.nwhc.ac.uk) is based on two main campuses in Nuneaton and Hinckley and has outreach centres throughout North Warwickshire, offering a wide variety of programmes to individuals, communities and businesses. The College was graded ‘outstanding’ at its last Ofsted inspection; now has LSIS Beacon Status which is awarded to the top 10% of the colleges in the country; and was awarded the Training Quality Standard with excellence in Adult Social Care.

Key challenge: Changes in how the College operates prompted review of accounting practices

Director of Finance at North Warwickshire & Hinckley College, Shabir Ismail explains, -Over the years the nature of our training provision has evolved with more and more courses being delivered across multiple sites and locations including delivery at employers’ premises. As a result, many personnel are constantly out of the office and are mobile much of the time. This means that financial processes were taking much longer than they needed to, as we had to wait for managers to return before they could sign off purchase orders and so on.

We also calculated that when handling documents manually, it takes approximately 10 minutes to process every order and 7 minutes to process an invoice. When dealing with 15,000 invoices per year this gives you an idea of the scale of time involved.

Solution: Implementing a paperless accounting strategy

In 2008, says Shabir, -we decided that we could cut out the paper trail and achieve greater efficiencies by introducing electronic based financial processes. By scanning and storing what were previously paper based documents electronically, we would hopefully overcome the delays and expense associated with time-consuming distribution and management. The key areas we wanted to address were reducing the time spent in processing invoices and ensuring that goods & services for learners were delivered faster.

The College began by implementing Symmetry Financials’ ‘DocumentManager’; a document management & scanning solution powered by Version One. In order to tailor the product to fit with the College’s particular workflow demands, the finance team worked closely with Symmetry to build a customised solution.

-We invested a substantial amount of time scoping out a strategy that would best fit our operation. This allowed us to explain fully what was required and enabled us to work closely with Symmetry’s development team to fine tune the implementation to our needs. In particular, we wanted an audit trail that showed who authorised, verified and processed each individual document. says Shabir.

DocumentManager enables more streamlined accounting by converting physical financial paperwork such as purchase invoices into electronic files. Invoices, for example, are immediately attached to the purchase invoice record in the accounting system at the point of input, saving time and speeding up the authorisation processes.

Introducing Portal – a personalised view of real-time finance information

The second part of the solution was to deploy an on-line dashboard of financial information that can be personalised specifically to the user.

Shabir says, -This allows us to speed up our workflow by enabling users to see at a glance what financial tasks require attention and in turn allows them to drill down to the relevant documents without having to have full access to the main accounting system. This means that orders don’t have to wait until a budget holder is back in the office but can be processed whenever and wherever they can go on-line.

-In time this will allow us to introduce real-time information to staff such as income or expenditure statements against budgets. It currently allows managers to drill down to the nominal ledger and change the cost code if it is wrong, rather than having to go into the main system. Senior finance managers can even view all the signatories on screen making it easier for us to approve payments.

Key Benefits 2,500 hours saved per annum

Shabir summarises the benefits that a paperless strategy delivers, -By moving to electronic based accounting the College can achieve efficiencies across the organisation. We can cut labour-intensive activities, speed up delivery of goods & services, meet environmental goals and make considerable cost-savings in terms of saving office space and reduced overheads associated with handling paper-based items.

The College has seen many benefits:

  • 2,500 hours saved per annum on invoice processing across the college
  • Authorisation time reduced by 10 minutes per invoice
  • for non-financial staff to concentrate on their key role rather than be distracted by administration
  • storage space required – moving to scanned copies means originals can be shredded over time
  • Goods & services delivered to learners quicker
  • Postage & Stationery Savings
  • Better relationships with suppliers
  • More sustainable/greener method of working
  • Releases time in finance department so value can be added elsewhere e.g. planning, cost control

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