Accounts Payable Automation to Resolve Common Challenges.
The responsibilities of Accounts Payable managers evolve constantly. Accounts Payable managers always have one thing in mind – to pay vendors quickly and securely, but manual, paper-based processes do not allow it to happen on time.
Accounts Payable departments need to spend hours handling various accounts payable activities such as invoice approvals, payment cycles, and paper-based processes.
Automation to Resolve Common Accounts Payable Challenges.
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The following are some proven strategies that help sort out the most common problems Accounts Payable managers face:
Handling the approval process manually can be difficult for Accounts Payable managers. Managing all the procedures such as invoice entry, approval routing, and payments, there is a chance to overlook something that increases the risk. Approvers are busy and the outdated invoice approval workflow obstructs Accounts Payable managers from paying vendors on time.
When sending an invoice through the approval workflow, there are two common bottlenecks. There could be an issue with the invoice bill – either service is incomplete or the amount is incorrect. Another delay could be the approver not reviewing invoices on time.
Accounts Payable managers spend most of their time following up approvers to keep the invoice flow in the payment cycle. According to Paystream, around 25% of businesses stated that manual approval routing is a major pain to accounts payable departments.
The following are some of the strategies that help Accounts Payable managers ease the pain:
Sending invoices through emails eliminates printing and faxing invoices and keeps them all in one place before defining the approval workflow. Automation to Resolve Common Accounts Payable Challenges.
Giving access privileges to multiple approvers reduces the delays that could happen due to approver’s absence. Defining these workflow permissions can help keep the invoice moving without any delays.
If an invoice is expected to be paid on a certain day, it takes the stress out of guessing when the invoice will be approved. A
Managers should be notified of any invoices that are not from the recommended suppliers or that seems to be duplicated. This prevents the invoice from being pushed through an approval workflow without proper approvals.
Matching POs with invoices is very critical in accounts payable processes. Not matching accurately would result in delayed payments, missed deadlines and discrepancy in the ongoing process. Consider choosing a solution that features 2-way, 3-way, and n-way matching mechanisms. The matching process would consider different criteria to match invoices and purchase orders, so you don’t pay for unauthorized purchase invoices. These matching mechanisms authenticate the invoices and prevent invoice fraud.
Of all Accounts Payable challenges, the biggest pain Accounts Payable managers try to avoid is late vendor payments. The reasons for late payments are lengthy and paper-based processes and there could be invoice errors that are not identified by the payment process. Late fees are the company’s biggest expense and paper-based accounts payable process would result in late payments and missed discounts. Long approval cycles, missing information, lost invoices, manual routing, and decentralization are some of the issues with invoicing. These pitfalls require Accounts Payable managers to spend more time on workflow to pay on time.
Online invoicing solutions can automatically route the invoice to the appropriate approver. You do not need to worry about misplaced invoices. Besides making the approval process paperless, E-Invoice solutions can schedule automated approval reminders to managers.
Accounts Payable automation allows the accounts payable department to check whether the invoice is raised by the preferred vendor. Batch processing allows you to approve a number of payments at once. This would not only save your time but allows you to analyze records and reports without fixing errors or chasing approvers to avoid late payments.
When old-fashioned methods are followed, Accounts Payable managers are required to manually enter the vendor’s information and payment details into the accounting system. Having fewer resources to manage more paper may result in costly errors, which include late fees, fraud attempts, and poor vendor relationships. Of all the risks, the biggest threat that Accounts Payable departments face is a fraud.
Paper-based accounts payable process makes it easy to miss some details; here are a few best practices Accounts Payable managers can implement to reduce the risk of paper-based fraud:
By making blank documents easily accessible, you are giving a chance for fraud to happen. Controlling access limits the risk of employees committing fraud.
Visibility into the payment pipeline manages cash flow and reduces the chances of unapproved payments or errors going unnoticed. Automation to Resolve Common Accounts Payable Challenges.
Digitizing processes minimize the risk of lost files, missing invoices, and fraudulent invoices. Cloud-based accounts payable solutions can store all invoices and payment data electronically and enforces fraud protection mechanisms in the reimbursement cycle.
The Accounts Payable department should keep track of payment data. Storing payment data in file cabinets hinders the auditing process. When reports are maintained in excel spreadsheets, financial risks and opportunities can be overlooked. Accounts payable software stores all the payments, invoices and vendor data into the system. Many solutions feature customized reports to track and recall data as when required. Automation allows your manager to track new metrics that figure out areas of inefficiency.
Other recommendations include periodic vendor contract reviews, monitoring over-payments, and following industry standards. Automation allows managers to analyze the data and the finance department can identify fraud risks, billing errors or opportunities to improve accounts payable processes.
Accounts Payable Automation to Resolve Common Challenges.
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