Introduction
It would be difficult to find a company that doesn’t have trouble keeping customers current on their debts. It’s difficult to run the accounts payable department. In addition to the fact that AP staff are overloaded, several other difficulties that slow down the AP process. Accounts payable can occasionally become so burdensome that it feels like nothing will ever improve.
We’ll discuss ten serious accounts payable issues in this article that, if left unchecked, might drastically affect your business.
We’ll get more detailed on implementing AP automation and taking preventative measures to prevent these issues from ruining your business.
Article Content-
- Bad data entry
- Disappearing Bills
- Irregular process
- Slow processing
- Missing money
- Inadequate storage
- Poor records
- Exceptional Bills
- Improper fraud prevention
- Manual Monitoring
- Conclusion
1. Bad data entry
One of the most significant issues with manual accounts payable systems is data entry errors. The process of manually entering data from invoices into the computer takes time and is prone to error. Even a minor mistake in the transfer of numbers might cost your business.
Another thing to remember is that if you use Excel or a tool comparable to it for your accounting, your spreadsheets probably include inaccuracies. A business’s Excel spreadsheets often have serious errors in about 88% of them. It takes a long time to find these mistakes and fix them. And you can never be sure that you caught them all if you only rely on manual fact-checking.
2. Disappearing Bills
There is a greater risk of losing track of invoices whenever you get behind on invoice processing. Incoming invoices can go missing, either permanently or just temporarily. In either case, if you can’t keep track of your data, you’ll simply keep running behind on processing bills.
Slow processing isn’t the only issue with invoices that are lost forever. If they don’t realize the invoices are missing, you’ll have to deal with calling suppliers and requesting payment if they haven’t already received it. Additionally, when it comes time for audits, you’ll have all the issues that come with a contradictory paper trail.
3. Irregular process
Streamlining the invoice process is difficult when there is no single system that controls accounts payable. Even if you have guidelines in place to control manual processing, staff members may interpret them differently or create alternatives. That might work in a small accounts payable department for a while, but the more individuals who are engaged, the more important consistency is to ensure that everything runs smoothly.
Various vendors can submit invoices in various formats (email, fax, paper, etc.). It will be difficult to create an efficient system for processing invoices if you can’t figure out how to handle them all in the same way. Fortunately, a reliable automation system will be able to deal with all incoming invoice formats and process them uniformly.
4. Slow processing
Processing invoices manually requires a large amount of time. In general, automation results in a nearly 5 times increase in the average number of invoices processed per AP staff.
You’ll see several benefits right away if you can use accounts payable automation to speed up your invoice processing. You’ll not only avoid late fees, but you’ll also be able to start benefiting from early payment reductions. And each of those things will assist your company’s cash flow. Additionally, you’ll free up more time for AP department staff members to work on tasks other than repeating paperwork.
5. Missing money
Processing invoices inefficiently leaves you at danger of financial loss. One reason is that your cost per invoice will increase the more time it takes to process an invoice. If your records are inaccurate and you make duplicate or excessive payments, another problem occurs. If your accounts payable department doesn’t detect the error and start recollection efforts, there’s a large risk you won’t see that money again.
You’ll miss payment deadlines if you fall behind on processing invoices. Late fees, one of the most common issues with accounts payable, will result from this. You have other problems besides just expenses. Additionally, being late on payments affects your connections with suppliers.
6. Inadequate storage
If you’re a perfectionist with a lot of free time, organizing your records manually is a great idea. But if you’re like most people, maintaining manual filing is just too much work, and storing paper takes up a lot of space that could be put to further use.
If you choose digital data storage, you’ll get an efficient filing and storage system that can be scaled to your needs. Additionally, digital document management makes it simple to search for and arrange your information. Additionally, it is a safe approach to keep your information on hand. While electronic data storage automatically backs up your vital information, paper is very easily damaged.
7. Poor records
If you manually file your data, it can be challenging to locate records of previous invoice processing. If you don’t know exactly what you’re searching for, it takes time to search through even the most effective manual record-keeping system.
With electronic records, you can quickly conduct a keyword search or quickly retrieve information by date. The data is then immediately saved, keeping all the records you require in a complete and searchable format. Day-to-day invoice processing is now better, but the largest improvement you’ll probably see is how much simpler handling audits is now that you’re utilizing automation software to monitor invoice processing.
8. Exceptional Bills
Not every invoice may be processed in the same manner. There will always be a few unusual bills or documents with errors. It takes longer to process these bills. However, if you use automation to speed up the processing, you’ll have the extra time you need to deal with exceptions.
You might discover that your AP automation software initially detects a large number of exceptional bills. You have the opportunity to define your company’s risk tolerance. So the software can recognise the difference between exceptional invoices and regular invoices. The software will get increasingly adept at identifying which invoices require manual intervention as you use it and continue to develop the system.
9. Improper fraud prevention
Accounts payable is regarded as a top target for fraudsters because it is typically where money leaves the organization. The majority of businesses don’t ignore the fraud issue. However, most businesses also don’t take sufficient measures to genuinely prevent fraud.
Understanding how fraud operates as well as strict controls and continuous attention are necessary for its detection and prevention. However, in a manual AP department, it can be challenging to create anti-fraud procedures that are effective. With the use of automation software, you can build up customized controls that uphold corporate guidelines and alert you right away to any unusual billing behavior.
10. Manual Monitoring
Almost nothing can be more frustrating than having to follow up. Unfortunately, most companies are forced to use a manual follow-up procedure. This involves checking through calls and emails if products are approved, fulfilling requirements, and delivered etc.
Follow-up is made easier by automation tools on two fronts. It will automatically remind those who haven’t yet approved invoices inside your business. You can set up a vendor portal for those outside of your business who are concerned about the status of their bills. Your vendors will be given restricted access to your accounts processing system as a result, enabling them to update their information and check the status of processed invoices without getting in touch with your AP department.
Conclusion
To ensure that you are improving your business, you must take advantage of the software offered by SWIL. This will reduce labour hours and errors in doing the job manually.
Thus, by updating how you manage your accounts payable, your business can operate more effectively than ever.
