Accounts Payable (AP) plays a crucial role in the financial management of every company, yet it’s an area often overlooked and overrun with challenges, leaving AP personnel juggling, and walking a tightrope to achieve a perfect balance of healthy books and good supplier relationships.
A staggering 61% of businesses still receive invoices in paper format but research has revealed 41% want to automate their AP process within the next 12 months.
Outdated, paper-heavy processes make it difficult, almost impossible, for businesses to overcome the common challenges associated with AP such as slow processing times, errors, misplaced invoices, and the risks of fraud.
Within this blog post we examine some of the common challenges associated with accounts payable departments and explore how automating can help overcome them.
Research from the Aberdeen Group revealed 20% of invoices regularly contain incomplete or missing data, and whilst human errors are unavoidable, they can often have costly consequences and cause lengthy delays, even something as simple as a misplaced decimal point. The affects can ripple across the entire organisation which can be difficult to contain and can hinder productivity and efficiency on a wider scale.
SOLUTION: Automation however incorporates features such as duplicate invoice checking to ensure no invoices are paid twice, line level extraction and ledger coding is automated and simple to add, eliminating the need for error prone manual data entry.
Paper heavy processes make for slow processing and invoice approval times as invoices often end up in a pile on a desk waiting for approval which can take weeks in some cases. On average it takes 15-20 days for invoice approval, and on average, 20% of invoices are paid late resulting in missed early payment discounts, late supplier shipments and poor supplier relationships.
SOLUTION: Approval times can be reduced by up to 50% with automation as approval workflows mean all approvers receive an email notification of invoices to approve, along with reminders to speed up the process further.
A lack of digital tools often makes it hard to track the status of an invoice, monitor cash flow and identify bottlenecks early. Without this visibility it can be difficult to keep on top of your financial status and payment deadlines can be missed and mistakes are often made.
SOLUTION: AP Automation software can provide real-time insight into the status of each invoice, and overall financial position so you can make smarter budgeting decisions.
According to research, a typical organisation loses 5% of their revenue each year to invoice fraud, which continues to be a large risk for businesses. Realistic looking fraudulent invoices or fraudsters imitating senior executives are common ways in which invoice fraud is conducted, and why it causes so many problems for AP departments.
SOLUTION: Multi-level approvers and bank account recognition features help identify fraudulent activity within automated AP tools, whilst Optical Character Recognition (OCR) and Artificial Intelligence (AI) add another level of security.
Putting together reports and reconciling paper records for auditing purposes can cause headaches for businesses as they delve into legacy systems or try to track down the relevant paperwork from across the business.
SOLUTION: One of the biggest benefits of automated AP software is the ability to store all required paperwork electronically for 7 years to meet auditing requirements. Documentation can be located easily at the click of a button, and information is centralised so real-time reports into financial status can be produced seamlessly.
One of the most important business functions, and responsible for the overall financial management of the organisation, accounts payable is often overrun with common challenges such as time-consuming processes and long approval times, increased risk of fraudulent activity, lack of visibility and frequent errors. Outdated and manual processes can make it almost impossible to overcome these challenges, however that is where automating your accounts payable department comes in. Automating your accounts payable can overcome many of these challenges with unique and intelligent features to combat fraud, provide first-class visibility and speed up approval times.
Opera 3 SQL SE AP Automation is an innovative tool that will transform the way you run your accounts payable. It’s user-friendly and harnesses a wide range of benefits to support your accounts payable department, to reduce costs and make faster, smoother supplier payments. For more information or to see it in action please contact us today.
Posted On: January 11, 2024
