All businesses need a steady cashflow to enable their daily operations to continue without delays or problems. Clients need to pay their invoices on time, while you need to ensure your suppliers receive prompt payment. Unfortunately, accounts payable problems can disrupt the process, causing cashflow to stall and restricting your organisation’s ability to spend freely – and these are much more likely to happen if your AP department isn’t fully automated.
The following scenarios are common issues that affect a business’s accounts payable efficiency, delaying the settlement of invoices and increasing the cost of processing them.
Problem 1: Late Payments
If your accounts payable department has yet to adopt an automated approach to its operation, late payments may be common, especially if your team is struggling to process a mountain of paper invoices and relies on spreadsheets for recording. Delayed payments can cause you to miss early settlement discounts or result in late fees which, over the course of a year, could add up to a significant figure.
Automated AP software such as Statement Matching can ensure that even high volumes of invoices are processed on time, reducing late fees and improving relationships with suppliers, which may enable you to negotiate preferential terms in future.
Problem 2: Time-Consuming Invoice Approval Processes
Manual invoice approval and processing can be a time-consuming business that involves a great deal of legwork, matching invoices with purchase order records, tracing and tracking payments and balancing the figures for the general ledger. This can result in invoice congestion, leading to delayed payments and late fees and, as your team struggles to meet deadlines, errors in data entry.
Streamlined invoice approval can manage the process from capturing the invoice to settling the bill. Human error, overpayments and duplicate payments are virtually eliminated, and invoices are settled in a timely manner. With the process simplified, it’s easy to carry out internal audits, track individual payments and produce financial reports.
Problem 3: Suppliers Do Not Offer The Best Terms
When an organisation consistently fails to secure the best terms from its suppliers, a golden opportunity is lost to boost its revenues. Positive relationships with suppliers can make a significant difference to your profitability. Businesses that repeatedly settle their invoices late, resulting in suppliers having to chase payment, are unlikely to be offered the most preferential terms; in the worst-case scenario, they may even lose their suppliers’ trade.
Automated AP software will ensure the timely settlement of invoices, helping to protect supplier relationships. Suppliers can enjoy more flexibility in how they submit their documents, while you will also be alerted to forthcoming situations, such as the renewal of suppliers’ contracts.
Problem 4: Suppliers Use Different Accounting Systems
If your organisation works with many suppliers, they will likely use a variety of accounting systems. For manual invoice approval, this can complicate the process, delaying the settlement of invoices and causing a backlog of work for your team.
Statement Matching integrates seamlessly with all major accounting systems and invoice types. Invoice data can be captured in any format from computers, laptops or mobile devices, while mobile access means you don’t even need to be in the office.
Problem 5: AP Systems Lack Robust Security
Accounts payable departments are a common target for fraud. After all, this is where money leaves a company, so criminal activity involving falsified invoices and payment tampering is not uncommon.
An automated AP solution includes several safety nets to prevent fraud from occurring, such as flagging up unusual or repeated payments. Access to data can be restricted so that there isn’t ‘an open house’ on sensitive financial information, while increased transparency means every transaction’s lifecycle can be tracked.
Automated AP Software From Statement Matching
Statement Matching’s automated AP software will ensure accounts payable best practice permeates your department, eliminating many of the common problems of manual invoice approvals, increasing efficiency and boosting the profitability of the business. To find out more, please get in touch with one of our advisers today.