How Technology Helps our Outsource Team – Part 1: Purchases

Technology is the heart and soul of everything we do at Farnell Clarke, and its apps that enable us to provide high quality outsource finance services.

App software enables us to automate and add efficiencies on the Bookkeeping/Processing side of things, which gives us back the time to ensure there are strong controls and audits in place, and just as importantly, allows management information to be prepared on a timely basis with relevant information for all stakeholders.

Many businesses come to us with little or no software/processes. The software we tend to recommend as our core app stack, bring basic to sophisticated processes that then can grow with your business. The right software should be picked wisely, with the future in mind.

Below is our core app stack, in detail, so you can see why we love them and recommend them.

Cloud accounts (Such as Xero and Sage Business Cloud)

We’ve covered this before; you can see our other article on Cloud Accounting here.

Purchase Ledger

Ensuring that invoices and cash come in is important, but if you don’t have control over your spending or a budget for the year ahead, then you may need to make some changes. The regular issues we usually see are due to no processes or controls being in place. Internal controls will usually take a second priority, when a business is so focused on growth.

Some things to think about:

• Have you agreed credit terms with suppliers? Are you paying on time, or are your credit accounts being put on hold?
• Do you pay expense claims or supplier invoices ad hoc rather than getting a regular schedule set?
• Are you verifying supplier bank details to avoid fraudulent activity?
• Is it taking time to setup new payees and payments on the bank?
• Data entry taking forever into the accounts system?
• Need to see a copy of an invoice but can’t make it to the office?
• Don’t know what you owe?
• Do you have staff expense claim policies?

For example:

Imagine you get an expense claim from a staff member, they have bought first class train tickets and lobster with champagne in order to entertain a client; can you be annoyed because they went against policy, or is there not a policy in the first place?

Dext

Xero without Dext is like a canoe without an oar. You can still paddle but it will be a whole lot more difficult!

Dext is our purchase ledger processing tool. It removes all manual entry of purchase ledger items including invoices, expense claims and cash receipts. Using OCR (Optical Character Recognition) technology, it extracts all the key information off the document such as supplier, date, amounts, VAT etc. It captures a PDF of the document within Xero for easy viewing – removing the need for paper records and it means you can access all your documents at any time. It has an app for on-the-move purchases, such as that very important morning coffee to-go.

It’s easy to get documents in to Dext, through taking photos on the app, forwarding emails with invoices attached or in the body of the email, scanning and uploading, and connecting online accounts (such as your utility bills/trade accounts etc), which allows Dext to merrily go off and extract invoices for you.

That is what our clients see, but for us, processing thousands of transactions a month Dext has so much more to offer. The aim is to automate 80% – we teach the system what you buy and where you buy from. We can tell Dext which last 4 digits on a card receipt relate to which credit/debit card and ensure receipts are marked as paid to the appropriate bank account. We can setup users for expense claims, or match to their relevant department/tracking category within Xero for reporting purposes.

ApprovalMax

ApprovalMax is our product of choice for control, approval and audits. The beauty of this product is that it’s great for future proofing, and can grow with the business, not all the functionality has to be in place from day one.

So, when don’t we use it? When you are a small business where costs are low, and you don’t require a finance inbox managed by Farnell Clarke.

Why would we still recommend it though? It is good practise and sets a great foundation. It has an easy-to-use app to approve or reject transactions that can just be bills as well as purchase orders if needed.

We love the matrix which allows you to build approvals based on transaction type, amount, supplier, item type etc. For example; anything under £500 for marketing just gets approved by a marketing assistant, anything £501 to £5,000 by a marketing manager, and anything over £5000 then needs to be approved by a director.

We also love the visibility on budgets. Why wait until month end for one of your department heads to know they are over budget or even under? ApprovalMax allows you to enter in a budget so when they see purchase orders or bills, they can check how they are against budget and can approve or reject.

When it comes to purchase orders, we know that not all business suit a purchase order system, but it makes cost approvals and visibility so much clearer. It puts the power back into your hands – no money is spent without a PO.

Purchase orders also have approval matrix in terms of who creates them, who approves them etc. Once an invoice is received, it can be easily matched in AM. You can then run reports on purchase orders that are not fully fulfilled, so an accrual in the accounts is needed, or, if a bill is more than the PO, it can be rejected.

There are many other amazing features, but the above items are the core reasons we love ApprovalMax.

Telleroo

Since taking on Telleroo, our mind shift of “oh no its payment run time” has changed to “payment run – nice!”. Telleroo provides a best of practise process, which is easy to follow and has strong controls. All communications are driven from one place.

For example, Xero for suppliers or Brightpay for payroll (excel imports/other software’s also integrate).

Our outsource team will submit a pay run directly from Xero and then Telleroo sends the monies to the payee. This removes the need to manually enter amounts into the bank which in turn reduces any potential human errors, such as paying the wrong amount or wrong payee. The notification to the approver of payments is automated with emails which makes the process consistent – it is also clear for the finance team to see if the pay run has been approved or rejected and further reminders will be sent automatically.

Any updates to a pay run in Telleroo will be immediately reflected in Xero, allowing any last-minute changes to be made. It also allows for any checks to be made in terms of fraud and payments that may have been declined by the approver. These will be automatically updated in Xero meaning that all systems are reconciled and in agreement (sometimes payments setup in banks expire if not approved in time, which means Xero will not reflect the invoice needing outstanding immediately.) Deep links let you jump from Telleroo to Xero and ApprovalMax quickly so invoices can be viewed from one place.

There is less reliance on multiple team members having access to the bank. Which covers for a situation of absence, or a ‘PINsentry’ not being to hand. It reduces risk by limiting the number of users on the bank.

Staff Expense Apps

We use a wide range of tools because these decisions will be different for every business and budget.

For claims – we have Dext combined with Trip Catcher for mileage, Xero’s own expense app. Also, products such as Expensify, or you can provide cards such as Soldo – in which you can load with funds and then have various settings to control what type of expenditure can be made. This also means that staff do not have to use their own monies to cash-roll the business and there won’t be any un-expected claims which could affect the figures and cash forecasting.

Still have questions? Here at Farnell Clarke, we are always happy to help. Feel free to contact us at any time here.