Maintaining strong and healthy relationships with your vendors and suppliers is critical for every business. For this, enterprises need to keep track of the entire accounts payable (AP) process to ensure smooth cash flow, without any delays. The AP process involves various tedious tasks such as filling spreadsheets, reviewing and double-checking for duplicates, plus verifying them against the correct Purchase Order (PO), which is difficult for most finance teams to manage manually.
Plus, the constantly increasing pressure to reduce AP processing costs while also improving efficiencies is adding more burdens onto your AP department. To cope with this, many organizations are beginning to invest in various technologies to automate their accounts payable processes. But, most of them fail to achieve the expected results due to inefficient AP processes.
Here we’ve discussed a few signs that justify your current paper-based AP process is inefficient.
Searching through a never-ending stack of invoices with manual or semi-automated processes can be frustrating for the entire AP department. Filling details, verifying invoices against the respective POs to eliminate errors, and processing approvals is time-consuming. To determine a budget holder for the invoices without POs, the AP team must search through emails, SMS, and calls to verify the payment should be approved. This can lead to late payments, and thus late fees. As the organization grows, this process will become more tedious and further delay the invoice approval process.
Lack of Control in AP Processes
The lack of control and visibility into the manual AP processes can lead to potential fraud and security risks. As there is no single system for providing a systemized and consistent framework of verification, there is a high possibility for the signs of any fraudulent activities to go unchecked. According to research done by the Association of Fundraising Professionals (AFP), 82% of large companies, and around 60% of the SMEs, experienced some type of fraud in 2018.
The alarming increase in security breaches and criminal activities is influencing many enterprises to invest in a automation solution which enforces strict adherence to company regulations and provides complete control over the entire AP process.
Lack of Visibility
Every company must monitor the current state of their finances to make improved business decisions. For AP departments, manually tracking the large amounts of documents to locate any outstanding invoices and cash flows of the company can be frustrating. If you’re using an advanced AP solution, there is no need to follow a paper trail. The software conveniently stores every processed document digitally, making it easier for your AP team to track down and sort the invoices in a matter of seconds.
Erroneous payments are comprised of duplicate, extraneous, or overpayments made to a supplier or vendor due to a variety of reasons. Manually verifying large volumes of invoices for inaccurate data might end up duplicating invoices and/or other frauds.
However, an accounts payable solution automatically reviews every invoice submitted by vendors and notifies the AP department about any duplicate invoices, helping them to eliminate errors. OCR technology for data conversion and other e-invoicing methods digitizes the entire process while eliminating errors from occurring.
The Bottom Line
The AP department of an organization is responsible for reconciling debts owed to vendors, utility companies, suppliers, and partners. While handling the massive amounts of data, including POs, contracts, reports, and invoices, there is a possibility for AP teams to eliminate mistakes. The advanced software removes the hassles out of everyday processes by automating the repetitive tasks such as entering the vendor and supplier information for each invoice, then verifying that invoice against the correct purchase order and so much more.
The software automatically captures the pertinent data and stores it in a cloud-based platform in an organized manner, allowing the AP team to access the old and new invoices in an efficient way. Experts understand that an automated solution slashes invoice processing costs by more than 80%. AP software extracts the crucial data from the invoice with Optical Character Recognition (OCR) technology and intelligently routes the invoices to the appropriate entities for approval.
Marissa Levin is a marketing consultant, freelance writer at SutiAP, who regularly writes articles on Business, Finance, ERP, and Cloud/SaaS trends