There can be many accounts payable challenges, but we can resolve them with some effective finance solutions. Let’s explore them in this blog.
Even the most seasoned finance personnel can encounter challenges in accounts payable. Let’s discuss these common challenges and tips on how to overcome them.
While accounts payable challenges make your job tough, you can adopt effective finance solutions to overcome these challenges. Let’s discuss the common challenges in accounts payable and possible solutions for each of them.
No one wants a mount of papers on their desk and filing cabinets, but unfortunately, this is part of manual processing. We deal with paperwork that’s not just hard to organise, but also hard to locate.
And, with all the paperwork, we tend to lose important documents too—such as invoices. This leads to a chain reaction consisting of supplier issues and accounting problems.
Getting rid of physical, tangible documents and going digital may just be the best thing you could do for your business and your accounts payable team. Expense management software properly organises and manages your documents so you don’t have to. You can finally say goodbye to dealing with endless paperwork!
Plus, expense management software has hyperautomation, auto coding and verification that drastically reduce labour.
Like many aspects of finance, inaccurate data creates a chain reaction of incorrect payments, delayed processes, inaccurate reporting, audit and compliance issues and more.
These effects lead to even further, bigger issues: Vendor issues, confusion, discrepancies and difficulty to reconcile accounts.
Regular data review and reconciliation can fix the problem of inaccurate data. Regular invoice reviews, vendor information verification and account reconciliation can help you spot data errors and fix them before they get worse.
Be sure to also check vendor invoices, items, price and quantity. For example, if you requested 10 designs from a design agency, be sure that all assets reflect in your purchase order and that you’ve received all of them before you pay the invoice amount in full.
No matter how sharp one’s attention to detail is, human errors are inevitable. The accounts payable process involves a lot of data entry, and when done manually, it could lead to wrong calculations, incorrect payments, wrong filing, etc. Imagine: A simple typo in a purchase order might lead to double payment as it generates two invoices of the same order. There’s also the risk of matching errors that lead to a tedious manual investigation.
Finance personnel are also no strangers to dealing with exceptions due to incorrect or incomplete data. This, therefore, leads to manual follow-ups, taking up many hours and resources to conduct and accomplish.
Automated processes equate to fewer errors. When you automate accounts and your finance process, you get rid of manually entering figures, preventing errors and typos.
Plus, AP automation software usually has a duplicate invoice check feature where they validate the information against a checklist of configured rules, thus reducing errors.
Slow processes and delayed payments are often caused by paper-based manual processes that have long approval timeframes. This could further lead to issues like late fees and delayed delivery of goods.
Not only does this cause a loss for the company, but it also ruins the business’s credibility and credit rating. It weakens your chances of obtaining favourable terms from suppliers too.
It’s easy to say that you can just implement a stricter deadline policy, but you need to be more detailed about this: Have a streamlined workflow, automate your accounts payable processes and establish payment schedules. An automated expense software can arrange workflows and automatically route invoices to the necessary people at every stage of the accounts payable process.
Make sure that you optimise the accounts payable process by diligently recording invoices, matching them with orders and goods received, promptly approving invoices and scheduling payments. Be sure to also establish a payment schedule that is properly communicated to your vendors so they know when to expect payment.
Even when a company has strict processes and policies, unauthorised purchases can sometimes find their way to its account. This is especially true with manual processes. When someone makes an unauthorised purchase, accounts payable will have to allot a huge chunk of time to investigate invoices for purchases to find the one that was made without approval.
There’s also the risk of fraud such as business email compromise, wherein scammers would impersonate executives or suppliers and request payment. This adds more burden for accounts payable teams as they remain constantly on guard against fraud.
AP automation has security features that strengthen and protect crucial information against cyberattacks. ProSpend’s hyperautomated accounts payable is empowered with fraud control that screens every invoice to quickly identify errors and anomalies.
Another solution that’s highly recommended is doing regular audits. When you regularly audit and monitor your payments, you can immediately spot red flags such as fraud attempts. Audits should include verifying invoices, conducting background checks on vendors and organising duties to prevent employee fraud.
While these challenges in accounts payable have various finance solutions, they can all be solved with one thing: expense management software.
Curious about accounts payable automation? Book a demo with us to see how it can overcome challenges in accounts payable.
A spreadsheet may do a lot, but it can only do so much. An expense software can do more than spreadsheets can, making expense management easier.
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Give your employees ProSpend physical cards with built-in spend control and security features.
