When members of accounts payable (AP) teams at specialty dealers suddenly had to start working remotely during the pandemic lockdowns, they quickly saw that they needed to adopt new ways of doing things.
Although team members were in different locations, dealers still needed to pay vendors and suppliers for vehicles, parts, utilities, and other goods and services.
For many, this accelerated their transition from paper checks to digital payables solutions that enable them to pay bills online. That way, the people who write the checks and sign off on them don’t have to be in the same place; they can do it remotely.
“A lot of customers were looking for a new feature that was going to create efficiency at their dealership, with or without the pandemic,” Candice Telfer, chief financial officer (CFO) at Motility Software Solutions, told PYMNTS.
Reducing AP Processing Time by 75%
Motility, a provider of dealer management solutions for those who sell heavy trucks, buses, RVs and similar vehicles, introduced in 2019 a payables solution called MotilityPay. This enables dealers to pay bills online and have the payments go out in the way the vendor or supplier chooses, including check, virtual card or automated clearing house (ACH) transfer.
While the pandemic lockdowns that began the following year accelerated the adoption of digital payables solutions, other trends are driving it as well.
One is dealers’ desire to reduce the amount of time spent writing checks. The time spent putting the paper in the printer correctly, putting it in the envelope and mailing adds up.
This is especially important with the amount of consolidation happening in the truck retailing industry because those who acquire other dealerships want to be able to scale without having to add accounting staff.
“We have seen the AP process come down by about 75% on a time perspective,” Telfer said. “That allows that accounting staff member to go to work on something that’s going to help drive the business — maybe it’s doing some analysis or just spending some more time making sure the bills are correct.”
When the solution is embedded in an accounting platform, this also eliminates the need for double entry because bills are entered, payments are made, and accounting is done in the same place.
Helping Eliminate Fraud
Another driver of digital payments is the need to reduce costs. In addition to the cost of the labor that goes into processing checks, there’s the cost of the paper checks, ink, envelopes, postage and storage of paper documents for audit and reconciliation purposes.
A third trend is the push for better security. A digital payables solution can require approvals so that after an accounting person enters in the bills, the CFO can look the files over and give them the OK before they are submitted for payments.
“So, you have that separation of duties, which is really important from an audit and a [generally accepted accounting principles] perspective,” Telfer said. “The person entering the bills isn’t also the person cutting the check or signing the check. This gives that dual process that helps with eliminating fraud.”
That visibility into payments that are ready to be paid or have been paid also helps improve customer service.
“If for some reason the vendor or supplier calls, they have access and quick visibility to all that information,” Telfer said.
Among the dealers who are still using checks, the main reason is the issue of change management, Telfer said. The process of writing checks is ingrained in the businesses, and accountants are accustomed to that being part of their system of “checking the box” on their to-do list.
“The accounts payable function can be seen as a little bit outdated,” Telfer said. “It’s a place where it does need some new technology and some things to help make the job a little bit easier.”