With the advent of automation software and cloud technology, you would think that accounts payable functions would be seamless and quite easily manageable at this point. However, progress in technology takes time to trickle down and many businesses still face challenges to track, pay and optimise the processing of the bills.
Managing the accounts payable department can be an overwhelming task. Not only are accounts payable staff swamped with work, but there are also plenty of other challenges that slow things. In case you do not have a digital system in place and are working with paper-based documents, the difficulty is multiplied.
Errors, delays or any type of irregularities can cause major problems for a business and it is important to set up proper accounts payable procedures to avoid inefficiency or inaccuracy. In this article we will highlight some of the challenges faced during the accounts payable cycle and provide ideas on how to fix them.
Ask any SME or even a large enterprise and one of their primary concerns is that payments are not being made in a timely manner. Sometimes it can be because the business needing payment takes time to generate the invoice and then to send it out by email or even post. The delay is also caused on the receiving end as it takes time for the accounts payable team to receive approvals from the deciding authority. Needless to say late payments can hurt relationships with vendors and suppliers and have a negative impact on your company’s credit standings.
To reduce the turnaround time for invoicing and payments, automated AP systems can be implemented. Self-service portals are also a great option to reduce payment time and give suppliers an option to know updates in real-time.
Many of accounts payable tasks require manual entry of data from invoices and other documents. As perfect as we believe human beings are, it’s quite obvious that the machines have us beat in this department! The more stages that require human input, the greater the chances for errors. These can be seen every day when prices are entered wrong into an invoice or the incorrect amount has been paid due to an input error.
Not surprisingly, one way to reduce the errors is by adopting a purchase order system that can help to digitise and automate most of the steps in the AP process. A good system ensures that every step of the process is followed automatically and saves a lot of time that would otherwise have been spent on tedious and time-consuming tasks.
The accounts payable department is a big red target for fraudsters and conmen as it’s one of the points where funds exit the company. If proper protocols and procedures are not put in place or adhered to then it becomes one of the easiest avenues to syphon money out. To counter this, technology once again comes to the rescue.
With an automated system you can set up custom controls that enforce company policy and notify you immediately of suspicious invoice activity. In addition, employees also need to be trained to maintain tight fraud controls and be aware of any current frauds doing the rounds. Here’s a checklist to get you started.
Keeping track of documents
Accounts payable functions tend to produce a substantial amount of documents due to the current setup of AP systems. Now all these documents need to be stored for records and auditing purposes. However, it’s no small task to maintain and store are all these documents. It also has potential to become a security risk if the documents get misplaced or damaged. So how else is it possible to maintain all this information while keeping risk to a minimum?
Yes, you guessed it, automation and digitisation. By saving all this data on to servers it reduces the need to physically keep documents and it’s also backed up in case of an emergency. Role-based user access controls would ensure that the information is easily available for the right level of users.
One of the most common problems faced by any business is to make payments on time and consistently. However, without an effective AP system in place it’s easy for payments to get missed or even worse, paying the same invoice twice. Inaccurate payments can have a detrimental impact on the relationship you have with suppliers and it also increases the workload as double the amount of work needs to be done in such cases.
To overcome these problems; firstly, it’s essential to reduce the instances of duplicate payments; secondly ensure that suppliers send the correct data to begin with and to have an easier process for approval of pending payments. Many businesses have nearly eliminated this issue through the use of an automated workflow process and system.
Your accounts payable process has a huge impact on your cash flow, regulatory compliances and supplier relationships. But many companies still struggle with manual data entry of paper-based documents, leading to costly discrepancies and inefficiencies.
Our accounts payable outsourcing services have helped clients improve the entire payables process. We can deliver higher accuracy and decrease operations costs through process excellence, standardised accounts payable best practices, and strategic use of automation.
We work with most of the major accounts payable software systems, and we can work with almost any software that you prefer. In addition, with the help of our in-house IT, we can help you integrate, implement, enhance and build systems and applications to streamline your processes. We also provide a dedicated Purchase Order system which can help your company digitize and automate supplier payments, where this will add value.
To learn more about how our team can help you, please email Ravi Kurani on firstname.lastname@example.org or call 0845 838 2592.