How Stampli Helps CFOs Improve Risk Management

CFOs must wear a number of hats, including the role of risk manager. Managing risk is becoming an area of emphasis for CFOs, and there are a number of reasons why:

• Operational risks: As pointed out here, every company produces a product or delivers a service, and that process requires a number of business operations to work correctly. Executives must evaluate each type of operation, and assess the potential risks.

• Compliance, regulatory risks: Your business must comply with laws and regulations, including compliance issues related to your industry. For example, companies with publicly traded stock must have an audit completed each fiscal year, and the audit includes an assessment of internal controls. Auditors are required to disclose any weaknesses in internal controls.

• Other external risks: Deloitte explains that CFOs also face risks due to “inflation, interest rate hikes, shrinking talent pools”, and global events.

In this podcast episode, Jeff Cross, CFO of BrandMaker, explains how businesses need to manage risk to operate efficiently, comply with laws and regulations, and to position the business to scale. Embracing automation is a key strategy to manage risks and to monitor internal controls. As an example, Stampli’s end-to-end Accounts Payable (AP) platform gives you full control and visibility over all your corporate spending from cards to invoices to payments—all in one place.

Here’s an example of a company’s AP process, and the risks associated with processing invoices.

Evaluating AP: An Example

Assume that Premier Furniture manufactures and sells furniture through retail store locations and on the company’s website. These are the steps required to process invoices and to pay vendors:

Invoice receipt

Vendors email invoices to one of six people in the AP department, depending on the vendor’s geographic location. The AP employee matches the invoice with the correct purchase order (if applicable), the shipping receipt, and other data. In addition, vendors send monthly statements and price sheets to Premier.

Coding the invoice

The AP staff inputs the invoice data into the accounting system, along with the correct expense account numbers. The hardcopy invoice and all other supporting documents are filed in the accounting department.

Getting approval for payment

AP emails copies of the invoice, purchase order (PO), shipping receipt, and other documents to the approver (or approvers, depending on the dollar amount of the invoice). Once each approver reviews the data and emails approval back to the AP team, the invoice is processed for payment.

Premier pays nearly 50% of vendors by physical check, and other invoices are paid using ACH and other payment methods. A copy of the vendor’s invoice is mailed with a physical check, and other vendors receive an email of the invoice being paid.

Completing bank reconciliations

The AP department can access online bank statements on the first day of each month. The team reviews each payment, including checks, and confirms which checks are still outstanding at month end.
Premier’s AP process may cause a number of bottlenecks, and exposes the business to a number of risks.

Assessing AP Processing Risks

Any process that involves hardcopy documents and manual processes creates more risk for a business. Premier’s system produces several types of risks.

Email attachments to multiple email addresses

Email is used to transfer information, and to ask and answer questions regarding AP processing. The number of email addresses used, and the number of emails sent, increases the risk that data is stolen or simply lost. Premier does not have a centralized location online to submit data and to communicate about invoice topics. Say, for example, that Premier buys 300 maple wood 2-by-4s from Mountain View Lumber, at a cost of $15 each. Here are some potential issues that can occur:

Competitors

If a competing furniture manufacturer sees Premier’s vendor invoices, that firm will know the materials that Premier uses, the vendor, and Premier’s material costs. This valuable information can be used to gain a competitive advantage.

Other vendors

Premier’s pricing and ordering agreements with vendors must be kept confidential. If Ridgeline Lumber, another Premier vendor, finds out that Premier is buying the same maple wood 2-by-4s from another vendor at a higher price, the information can damage the vendor relationship.

Lost records not transmitted

The longer someone holds a document, the more likely it is to get lost. Think about a salesperson on the road who must save receipts for travel expenses. If the salesperson is expected to copy receipts and submit them as email attachments after a trip, receipts may get lost before the individual returns to the office.

Additional sensitive documents

Premier may also have written contracts with vendors, or need to confirm a vendor’s tax ID so that a 1099 can be issued for tax purposes. If an email falls into the wrong hands, a third party can damage Premier or the vendor’s business.

Premier needs to limit the data sent by email, and find a process to upload documents into a central online location.

Managing hardcopy data risks

Hardcopy data also moves between vendors, AP staff, and approvers. When physical data is moved, the risk of loss increases. Some parties may print hardcopies of the data for their office files, which increases the risk that sensitive information will be stolen or lost. Finally, hardcopy information requires an increasing amount of space for storage, and finding records in files can be time consuming.

Monitoring AP activity

Premier’s system makes gathering and monitoring AP activity slow and inefficient. The accounting reports may be inaccurate, because data is missing or not accurately entered into the system. Consider these issues:

• A system using multiple emailers and hardcopy documents delays invoice approval, which may anger vendors and hurt vendor relationships. With companies already dealing with supply chain disruptions, it’s even more important to retain vendors who can deliver quality items on time.

• Premier may miss taking advantage of sales discounts, because the invoice due date is incorrectly posted in the accounting system.

• The business may pay duplicate invoices, because information regarding payment of an invoice is not posted quickly.

• Assume that Premier’s approval policy requires two signatures on each purchase over $5,000. If the policy isn’t followed, due to an efficient system, the company may not stick to its budget and overspend.

You can reduce risks and operate more efficiently using Stampli. Take control over invoice and bill processing with smart, intuitive, and actionable AP Automation.

How Stampli Improves Risk Management

Stampli is a complete AP Automation software that brings together accounts payable communications, documentation, corporate credit cards, and ACH or check payments all in one place, allowing AP to have full control and visibility over corporate spending. 

Stampli adapts to your existing AP process, which makes the implementation much easier, and you control how to pay vendors.

The benefits of automation

Stampli’s AP Automation software solution uses Artificial Intelligence technology — Billy the Bot — to automate AP invoice processing and learns an organization’s unique patterns to simplify GL-coding, automate approval notifications, identify duplicates and more. Use Stampli to reduce the risk of coding errors, and to save time for the AP staff.

By centering communications on top of the invoice itself, AP departments collaborate and communicate better with approvers, vendors, and any stakeholder involved with purchases, allowing approvals to happen 5x faster. 

Users can assign one email address to receive invoices, and documents can be uploaded into a secure, cloud-based system. With Stampli, you can sharply reduce the emails needed for communication, and eliminate hardcopy files. Use the Vendor Portal to give vendors access to their invoice data, and a platform to ask questions.

Automating AP gives users visibility into bill activities, statuses, and ownership with greater transparency and accountability. Audit-ready histories of approved bills are stored in the Stampli AP Automation system, and invoices can be accessed anytime.

Keep using your existing processes

Work the way you want to with Stampli’s AP Automation software. The flexible Stampli platform is readily configured to accommodate your specific accounting and purchasing processes — offering a seamless AP Automation integration with many ERP and accounting systems. 

Your ERP system remains the source of truth for your organization. Implement an AP solution in less time, and get your AP staff up to speed quickly. As your business grows, you can process more transactions in less time using Stampli. 

We offer the fastest setup in the industry with unlimited, ongoing support in the form of an on-demand AP professional – from implementation to onboarding to training and beyond. It’s like adding another AP specialist to your team.

Use Stampli to fully automate the AP process, and to improve risk management.