Productivity through the lens of invoice processing.
1. Why Productivity Is a Double-Edged Sword
For the longest time, many companies have been measuring the success of their employees by how efficient they are at getting the job done. This was considered the norm or a key metric of what it means to be productive.
But today, there are plenty of issues associated with this approach.
Generally speaking, in the short-term, being productive makes any team or individual seemingly successful. On the surface, we manage to clear things off our to-do list, achieve inbox zero and, even feel a sense of satisfaction because what we do seems transactional.
Oftentimes, this boils down to working across teams, being collaborative and tapping on technology to streamline the mundane tasks.
According to a survey by Slack, “respondents were eager to share what mattered most to them at work, and what frustrated them. Employees felt both they and their company valued “making money” and “efficiency” the most.
The reality is that work has become incredibly complex and fluid.
But beyond that, perceived employee and company values diverged. Workers felt their companies valued “doing something new and innovative” quite highly. Employees also wanted innovation, but they thought “having autonomy” and “being part of a team or community” was more important.”
The reality is that if all we focus on is efficiency, we’ll move fast but lose sight of where we should head. Worse yet, if we realize we’ve been running in the wrong direction, we have to backtrack — which becomes inefficient.
The reality is that work has become incredibly complex and fluid.
It requires software, and it tends to follow us everywhere thanks to the ubiquity of mobile devices. Also, information is now abundant within organizations and has become more decentralized than ever.
To be productive and remain relevant, we need to adapt to the environment we live in, to delight the customers we work with and create better work relationships with stakeholders, vendors, and business partners.
This process typically takes time, and those involved need to switch towards a mindset of growth and working closely with new technology.
But how can productivity become a key element in any business situation?
Traditional industries have more tangible ways to measure productivity.
In the manufacturing industry alone, if you can produce more goods over time with fewer resources, then you know you’ve increased productivity. This mindset is known to date back to the Industrial Revolution, and it has become a blueprint for more modern-day business.
The productivity calculation is less clear when it comes to knowledge work — work that mostly involves is dealing with information.
In our line of work, we could say that productivity is measured by the total number of accurate invoices someone (say a manager or executive in an Accounts Payable department) processes with minimal effort.
The logical consequence is that when teams become productive, they immediately reap these benefits:
• Cut costs by getting more done in less time
• Cut time spent on manual tasks
• Increase your revenue by increasing profit margins
• Keep customers delighted by staying on track, on time, and on budget
• Have more time for expansion, growth, and optimization
2. How to Achieve Productivity
Improving productivity can be a challenging task — especially if we’re coming into an already established work dynamic.
Employees — and people in general — are known to be typically resistant to change.
But for organizations to really thrive, managers need to embrace change if this means increasing productivity.
However, there are a few common management practices that get in the way of this.
As we rethink work, the focus of all workers needs shift from mundane tasks to other areas.
In the old times, it was typically up to an exclusive group to innovate and increase value for their department.
But today, more organizations thrive because they are filled with curious life-long learners who bring purpose to work, discover new knowledge by confronting unexpected challenges, and are empowered to do much more than just executing.
More than having an execution mindset, teams also have the chance to think beyond operations.
An example is the work done in the Accounts Payable department of a manufacturing company or in accounting firms.
There are usually a few processes people deal with in this context:
• There’s a lot of manual work involved, which is time-consuming and error-prone
• The information doesn’t always make it in full from one person to another
• Manual data validation is time-consuming and error-prone
• Messy documentation due to collaborating with stakeholders via phone or email
The main challenge in becoming productive in the process of an Accounts Payable team is to keep track of all the variables involved and ensure that requirements are met.
We know a few facts about how teams typically deal with requirements in this department:
• Invoices need to be processed in 24 hours of being received
• Invoices need to be processed 100% accurately
• Invoices need to be paid on time
• Invoices should follow the approval process
There’s a lot to be done and we see a real need for automation to come into play.
3. Embracing New Apps and Solutions
People use a vast array of tools at work, from mobile phones to monitors, to software like task managers and customer relationship management.
In certain departments, employees have the green light to pick what they use for project management and other times, the management comes up with a standardized application stack such as an HR or payroll application for salaries and a CRM for their sales leads.
Still, workplace tools provide dozens of opportunities for elevating employees’ mundane tasks into proper processes that work seamlessly.
But when it comes to software, can teams talk management into implementing certain apps they prefer, as long as they fit into the company’s broader suite of applications? And if yes, to what extent?
Even then, deeper questions can arise.
When a company wants to make a big change, how much say do people get on that transition? Which features get the highest priority? Are the apps easy to scale across the company? Do they help people focus above all?
People likely don’t want to answer all these questions themselves — and probably shouldn’t — but our research suggests most want to at least get involved from time to time. They want the option to change course or try something different.
Technology solutions have the ability to streamline the workspace
By reinvesting the business’s infrastructure, companies reap rewards in no time. Not to mention employees will come away with a better impression if the company keeps up with trends instead of stagnating in the past.
Slack’s Future of Work report found that 76% of workers want more communication tools available to them in the future, and 74% of respondents in one McKinsey survey reported that social technologies were somewhat, very or extremely integrated into their day-to-day duties.
In finance, professionals think of accounting automation tools as a way to save time, but such apps can deliver an even greater value beyond the productivity mantra: reduced risk.
We know for a fact that automating processes reduces the likelihood of user errors.
Automating common accounting tasks opens up the possibility of real-time reporting, which means finance teams can catch potential problems and resolve them while they’re still fairly minor.
This translates into improved work, better results and time to focus on relationships with clients, vendors and stakeholders. Everybody wins.
Accounting departments deal with thousands of documents to process, analyze, and transform in order to carry out daily operations.
Examples include receipts, invoices, statements, and contracts, so it’s important to be able to understand the information embedded within such data.
Thanks to automated invoice processing, it is possible to do the same tasks, but in less time — and with reduced errors. This means less double-checking and repetitive tasks and higher productivity and efficiency.
Invoice processing applications for small businesses make it extremely easy to move away from paper invoices and into digitized invoices.
When you use an invoice digitization solution to digitize invoices, it’s easier than ever to connect it to your accounting software and to import invoice data seamlessly. This will allow companies to have a complete booking process for invoices.
4. Redesigning Current Practices in the Organisation
People fear change because they can’t predict its outcome but data and research show that organizations do have ideas about how the change will pan out and what employees can expect.
Adapting to new responsibilities and learning extra skills is part of the new normal for companies that want to build long-lasting relationships with their clients.
New technology brings new opportunities, and it’s up to employees to resist it or embrace the changes they bring.
A Business Times article highlights that accounting and bookkeeping clerks in Singapore require more specialised technical skills such as business and data analytics, strategic business advisory, business partnerships, management accounting, and risk management.
Digitization is indeed changing the world in which we live in. But established and emerging digital technologies are making it easier for teams to manage and grow businesses and serve their customers better than ever before.
And adoption and properly automating data entry can enable businesses to create a great customer experience, plan better and develop timely financial insights to gain competitive advantage.
A huge part of productivity software focuses on providing shortcuts — simplifying inefficient processes and workflows to minimize them.
While they don’t completely remove problems — they just make them easier to manage. The majority of these tools basically organize and simplify our digital workspace — from locating files, sharing documents and processing data, to pulling data between tools and saving resources for future reference.
So why are people so resistant to change to a way of working that’s simply better for the whole organisation?
The first thought is that it may really be your internal operations that are holding you back.
To get started, ask yourself these questions to audit your current operations and see what’s possible to achieve:
• Are you relying on processes that were devised a decade ago?
• Are your employees doing inventories by hand?
• Do you require paper documentation?
• Do you use filing cabinets?
The idea that humans avoid change isn’t exactly new. We’ve already explored why people resist change at work, but it’s easy to see why change in any area of our lives can be challenging.
Change means stepping out of our comfort zone. It means abandoning what we know to pursue an uncertain end. It means insecurity, opening us to risk — and risk is deemed dangerous to many.
Change at work is inevitable, but there are steps you can take to make the transition easier.
Technological innovation is a natural, healthy and wholly expected part of running a business. You need to constantly improve your tools and processes in order to grow.
But no matter how cool it is, your new technology is completely pointless until people actually adopt it. We take a look at some of the main reasons people resist technological change and explore winning strategies which encourage employees to rapidly adopt new technology.
Take a real close look at how your business runs on a daily basis and try to notice the processes that really slow you down. Identify the bottlenecks and introduce new ways of doing things.
Trial and error is an excellent way to grow, improve, and be more productive. You can’t simply expect your employees to work harder.
That only gets you so far (and can lead to hard feelings, burnout, and bad situations).
You have to take an active approach toward improving efficiency and effectiveness if you ever want to really improve your productivity.
Here are a few pieces of actionable advice to help prepare employees for change according to HBR:
1. Start with a small group of early adopters: successful transformations begin with small groups that are connected by a shared purpose. Leaders can give voice to that shared purpose and help small groups connect, but the convincing has to be done on the ground.
2. Identify a foundational change: start with something that represents a clear and tangible goal, involves multiple stakeholders, and paves the way for bigger changes down the road.
3. Network the movement: every large-scale change requires both leadership at the top and the deepening of connections by pitching to an ecosystem of stakeholders.
To this we’d add:
1. Explain why the change is taking place. In order to accept change, employees need to understand the basic motivation behind it. Take time to communicate this — and if you have to give bad news, carefully prepare your speech and delivery. Speak calmly and empathetically, and think about what type of follow-up communication people might need.
2. The concept of change can take a while to sink in, so if people don’t immediately have questions or voice their concerns, make sure they know you’re available to listen whenever they may need it. Your focus at this stage should be on communicating the change in a way that helps people quickly recover from any shock. Only once the shock abates can acceptance begin.
5. Tapping on the Pareto Principle
First, what is the Pareto Principle?
The Pareto Principle can transform your business, but let’s first cover what the Pareto Principle actually is.
The Pareto Principle (also known as the 80/20 rule) dates all the way back to 1906 when famed Italian economist Vilfredo Pareto observed that 80% of Italy’s land and wealth was owned by 20% of its population.
Over time, the 80/20 distribution was observed in a variety of circumstances, and eventually, The Pareto Principle evolved to today’s more general definition of 80% of outcomes are driven by 20% of efforts.
Companies need to identify Pareto propensities, as well — they need to algorithmically crack the code on the tiny adjustments that promote order-of-magnitude business impacts.
Managers and finance teams need to reorganize themselves around Pareto potentials and possibilities, not just more and better data.
For instance, in the finance space, the Pareto Principle can function as a to-do list for the AP team.
Individual members of the department, especially when faced with overwhelmingly mounting tasks, apply the 80/20 rule to prioritize the tasks that will bring the most benefit to move to the top of the list.
The 20% of the tasks on their day planner will yield 80% of the benefits for that day, and must be taken care of first as a priority.
Invoice Processing and the Pareto Principle
Implementing automation in the AP departments can also free up time for the staff to focus on these business-critical tasks, while the solution handles the clerical work without human intervention.
Just like in 1896 Vilfredo Pareto showed, that 80% of the land in Italy was owned by 20% of the population, it was Microsoft that gave a good example for the software industry years later. They found that, by fixing the top 20% of the most reported bugs, 80% of the related errors and crashes in a given system would be eliminated.
Regarding the functions of Accounts Payable, the 80/20 rule holds true for the bigger picture items as well. When AP managers are looking to streamline the accounts payable process, the Pareto Principle should be the first that comes to mind for invoice management, inventory, and expense analysis.
There’s only one way to tackle a multiple step process: one step at a time.
We understand that the best solution for the given accounts payable system is one that removes a considerable amount of the manual work involved while boosting accuracy, turnaround time, and transparency.
With the 80/20 rule, there are no hard and fast rules; the way The Pareto Principle plays out in your business is going to depend on your systems, your products or services, your customers and the other factors that make your business unique.
1. How to Measure Productivity
How can we measure and improve productivity? It’s a daunting question that all of us face. But that wasn’t always the case.
In 1909, Taylor published “The Principles of Scientific Management.” In this, he proposed that by optimizing and simplifying jobs, productivity would increase. He also advanced the idea that workers and managers needed to cooperate with one another.
In it, he put forth the revolutionary idea that production rested on variables related to men and machines.
Therefore, managers could — in a scientific and systematic way — optimize these variables to produce more outputs with the same amount of inputs.
In other words, businesses could make more money without any extra costs.
They just needed to figure out the right ways to train and standardize employee actions. By fixing “blundering, ill-directed, or inefficient” human efforts through “systematic management,” individual — and by extension national efficiency — would rise, giving way to “maximum prosperity” for both employer and employee.
Of course, since the early 1900s our economy has undergone a profound shift from industry to the so-called “knowledge economy.” The emphasis on coal and steel has given way to software and intellectual property.
Today, knowledge workers make up nearly half of the overall workforce.
As a definition, productivity is commonly measured as a ratio between the output volume and the volume of inputs. In other words, it measures how efficiently production inputs, such as labour and capital, are being used in an economy to produce a given level of output.
According to HBR, “productivity is about doing more with the same. Growth in labour productivity is measured by the change in output per labour hour over a defined period of time. For a country, productivity is closely linked with living standards.
For a company, it is directly tied to performance. With higher labour productivity, a company can produce more goods and services with the same amount of relative work. In contrast to efficiency then, productivity is about expanding the numerator, the output, in order to deliver greater top-line growth from the same workforce.”
Knowledge work can’t be measured according to the physical units of production-line output; tasks simply can’t be so uniformly standardized or easily replicated. So we instead need to set specific goals to measure the impact of our efforts during any given period.
These goals can be short-term in nature, as when defining what you want to achieve with each deep work session — e.g. writing a certain number of pages or chapters, or coding a certain amount of modals. No matter how small the goal, as long as we’re clear what it is, we’ll know when we’ve achieved it.
Productivity is important but how do we measure it exactly?
Here are some of the most popular single factor measures used to track it:
Average task length x total hours
This metric boils down to finding an average benchmark for how long a task should take from previous examples, and then measuring ongoing performance against it.
Number of tasks completed x time spent
This measures the most traditional view of productivity : the number of units produced against the time put in. The value is measuring how much has been achieved or how much people complete within a specific timeframe.
Total hours worked x hours budgeted
This helps us work out the capacity of our workforce against their contracted totals and highlights overtime.
Average number of tasks per standard project
This is great for identifying broken workflows and needlessly complex project plans across similar types of work. It’s really useful for finding out which processes stall productive work.
Number of tasks completed x number of employees
This uses the same understanding of productivity above, but exchanges time for employees to get an idea of labour productivity.
Total hours available x active work time
This gives a utilization benchmark — seeing how many of the set hours you have available each week are actually spent on productive work (as opposed to unproductive tasks like meetings, email, admin work, etc.)
2. Building on the Power of Automation
When we finish invoice processing and examine how we’re spending our time, chances are, we’re going to identify some tasks that we can’t exactly eliminate but also aren’t exactly producing results.
And for those tasks, the best thing we can is to embrace automation.
Automation is a great way to streamline tasks in our business that are necessary but aren’t necessarily producing a ton of results.
So, let’s use invoice processing as an example. This process is a necessity in any business as we have to manage our company’s invoices no matter what.
But spending 10+ hours a week manually performing this task isn’t exactly a good use of our time and it’s not going to produce any real results.
That’s where automation comes in. Instead of wasting hours every week on the process manually, we can use an app to automate the process of digitizing invoices, managing documents, and keeping the financials of your business in check.
Then, we can take back the time we were spending on processing invoices and focus it on the areas of our business which are producing results.
Automation isn’t just about robots on assembly lines or smart computers replacing professions — it is a crucial part of any organisation’s digital transformation. All too often, discussions about automation focus solely on distant possibilities and forget that widespread change is already happening.
Automated processes are at the heart of the digitally enabled business, with 83% of IT decision-makers stating that automation is essential for digital transformation within their companies. On the operational side, this translates to data being automatically collected and transferred within the business, preventing information being siloed.
3.Remembering the Human Element
Few people would argue that empathy isn’t important, but in terms of getting people to accept and embrace a new digital culture, it might be the single most important aspect.
Accepting that some people just don’t like change — no matter how exciting and beneficial it is — is crucial; if you ignore resistance and go ahead, you may find yourself joining the 90% of companies whose transformations don’t succeed.
Start by communicating changes with empathy – listen to the team, ask them how they feel about it; if you see signs of resistance, try to identify what’s behind them. But ensure you do this in a thoughtful, genuine manner.
Make sure those who feel reluctant know you don’t see their reticence as a sign of incompetence or naivety — most of the time it’s just down to a lack of understanding and it’s your responsibility as a leader to correct that.
4. The Effects of Tech-Enabled Productivity
Today, accounting departments deal with thousands of documents to process, analyze, and transform in order to carry out daily operations.
Examples include receipts, invoices, statements, and contracts, so it’s important to be able to understand the information embedded within such data.
Thanks to intelligent data extraction, it is possible to do the same tasks, but in less time — and with reduced errors. This means less double-checking and repetitive tasks and higher productivity and efficiency.
When using a data extraction solution, you should be able to simply drag and drop your PDF invoices into a dedicated portal or email them to a designated email address.
We no longer need to do anything manually. Instead, the solution reads your document quickly and accurately, pulling the data your accountant needs.
Accountants then review this data and book it into the accounting system. The solution then stores the document in the cloud to ensure compliance and easy access.
The Benefits of Process Automation
Financial departments are aware that there is a real need to make the data entry process more productive.
So rather than using an Excel spreadsheet and receiving physical receipts and invoices from staff and suppliers, we need to look at solutions that allow quick data extraction and digitization of paper documents.
• Saving time. We can automate things to get where we want faster, or we can set up standard processes for our most consistent actions. In practical terms, that could mean pulling disparate databases into one auto-updating reporting system or automating invoice processing to free people up for more productive work.
• Quicker response. Automation cuts down the time it takes to do reports and audits across all manual processes, which means we can respond to customer and stakeholder requests quicker. Aside from being able to service more people in less time, faster and more engaging communication makes businesses look professional and reliable.
• Enhanced productivity. By cutting out low-value tasks, we free up time for meaningful work — as well as the cognitive space for focusing deeply on difficult tasks. If we use automation to track workflows, we can also unearth our own productive patterns and address unproductive behaviours.
• Lower costs. Automation pays for itself by helping us spend fewer billable hours and resources on low-value, repetitive work. But automation tailored towards accounting can also help keep a proactive eye on profitability — making overlooked costs visible and breaking down exactly how we spend across different projects.
• Increased accuracy. While humans are prone to error, automation is highly precise. It can capture all important data without overlooking anything or misreading. It also eliminates situations where files are lost or steps are missed.
Gaining control of repetitive tasks isn’t an easy feat but we can by carefully achieve success by evaluating our daily schedule and determining what can be eliminated, what can be delegated, and what should become a priority.
The idea is that by assessing your time spent on manual tasks, you can determine what needs to be optimized and how.
The benefits that teams will see after moving to automation are real hence instead of spending more time performing admin tasks such as data entry and filing documents, companies will now be able to save time and create seamless work processes.