Accounts payable (A/P) faces difficulties even while operating at peak efficiency. Even while your company can take steps to assist these processes go more smoothly and simply, there will always be a significant amount of work that needs to be done, either manually by your staff or electronically through automated accounts payable workflow automation.

However, while accounts payable is only a small portion of your entire accounting procedures, any deficiencies or limits therein could have an impact on more extensive issues. On the other hand, priorities and procedures from your overall financial efforts may cause delays or difficulties in your A/P task.

Here are the biggest accounts payable difficulties that companies encounter, along with some accounts payable best practices that can help.

The Top 5 Payables Challenges

Think about the conflict that exists between your accounts payable and your purchasing operations. Even while both processes are a component of the larger procure-to-pay process, each stage has its own priorities that, if ignored, might irritate both your internal employees and your suppliers.

Although difficult, it is possible to accommodate this ongoing strain. However, it necessitates a clear direction, effective procedures, and occasionally IT investments. On the other hand, disregarding this tension can frequently result in the following problems.

  1. Documentation mistakes

Unfortunately, documentation may be lost or forgotten quite quickly, especially when it involves actual paper. Additionally, a missing invoice is frequently an unpaid payment, which can result in fines and damaged vendor relations.

The accounts receivable (A/R) departments of your vendors and suppliers might also make errors, such as sending an invoice more than once. So, before your company pays twice for the identical items, your A/P personnel needs to be able to spot and rectify these duplicate invoices swiftly and simply.

The remedy: digital records

The possibility of potential documentation errors can be decreased by using an e-invoicing system or comparable payments gateway. It is quicker and simpler to transfer invoices and related documents with your back-end accounting systems when your suppliers submit them electronically directly to your company.

Your financial staff can more easily spot anomalies like delivery without a corresponding invoice or multiple bills when working with data rather than actual paper.

  1. Fraud

Someone is constantly seeking for methods to turn your money into their money. Additionally, according to data gathered by the Association of Certified Fraud Examiners (ACFE) for their 2020 Global Study on Occupational Fraud and Abuse, 41% of analyzed incidents of fraud include ordinary employees. Even worse, the accounting, finance, and purchasing divisions of the businesses were responsible for 24% of these fraud cases.

Of sure, external parties continue to pose a danger. Your company needs to be on guard against this fraud because there are countless tactics, including fake invoices, light or defective goods, and check fraud.

Controls over security are the answer.

Although you can’t count on fraudsters to leave you alone, there are a variety of security procedures and tools you may implement to safeguard your business. For instance, you can assign different individuals or departments the authority for different phases of the procure-to-pay cycle.

You don’t want the person in charge of scheduling a purchase to also be the one who approves the final payment to deter fraud. Similarly, unless you don’t care about sending payments to fictitious accounts, the person in charge of adding new suppliers to your accounting systems shouldn’t also be the one who approves the checks being sent to that new vendor.

And while routinely analyzing and auditing your payments can help weed out internal fraud, you’ll also want to put systems in place to recognize external dangers. These efforts will typically be concentrated on verifying that the information on the shipments you receive corresponds to the associated bills.

  1. Secret data

Many verification procedures are typically included in A/P operations to ensure that a requested payment is legitimate. Your accounts payable personnel also needs full access to all the data and records created since the initial purchase in order for these verifications to be successful, as well as for the efficient operation of your entire accounts payable procedures.

The fact that this information is frequently dispersed across several sources and necessitates employees to spend hours searching through various apps, filing cabinets, or both to acquire the necessary data makes this accounts payable difficulty.

The answer is centralized.

Numerous data-related issues with your accounts payable operations can be resolved with effective platform integration across all of your interconnected financial systems. Data is frequently accessible from any of the integrated systems, eliminating the need to search through different apps, and it can be rapidly searched for and located for specific transactions or shipments. At the same time, you may carry out your payment verifications more accurately and rapidly if your integrated A/P platform has 2-way or 3-way matching capabilities.

Additionally, your organization can quickly report on and gain insight into business-wide operations by establishing similar procedures across departments and regions, enabling key decision-makers to make better decisions.

  1. Contradictory priorities

Your A/P personnel is in charge of much more than just settling past-due invoices, as you are aware. And one of these crucial tasks is assisting your company in prudently managing its financial position by deciding when payments are made. However, issues arise when these options don’t satisfy all interested parties.

For instance, if you’ve been delaying payment of invoices until the very last minute, your purchasing department might be thrilled with your huge cash reserves while your suppliers might be getting progressively irritated. Your general accounting staff can also become unhappy after adding up the higher product cost because of the lost early payment discounts.

The difficulty of your verification efforts must also be compared to the time and effort needed to carry them out.

Communication is the solution.

Conflicting priorities can signify a serious breakdown in worker communication when they impede your accounts payable efforts. Setting up regular cross-department meetings to describe current and future plans, especially those requiring wider cooperation, is a crucial component of accounts payable management regardless of the size of your financials team. After all, unless your A/P team is aware of the pertinent investment or financing plans, they won’t know to postpone making certain payments in order to accumulate necessary cash reserves.

  1. Slow operations

Although preferable than a missed payment, late payments can still harm your company’s finances and client relationships. Furthermore, your company will be less likely to benefit from any early-payment incentives that may have been agreed with the vendor the longer it takes your accounts payable department to receive, verify, and pay a fixed invoice.

Accounts payable procedures that take too long are frequently caused by manual workflows, human error, extra steps, duplicate steps, or validation problems.

Automation of workflow is the answer.

Of course, understanding how to automate accounts payable operations can help with many of these issues, at least in part. You can work on your business-critical A/P duties round-the-clock and prevent typical process bottlenecks because the majority of your verification and processing chores are performed without the need for human interaction. Similar to this, reducing the number of manual touches on your financial data reduces the possibility of blunders or unintentional errors.

Businesses frequently examine their internal workflows when automating these crucial tasks in order to remove extraneous stages that can result in further payment delays.

How AP automation software can help you with your problems

Depending on how many processes you decide to automate, choosing the best platform with A/P software capabilities for your company will take some investigation and work on your part. Therefore, consider options that play well with others, which means that they offer thorough integration capabilities, while considering potential tools or apps to expand your A/P software portfolio. Additionally, look for solutions that offer a free demo or trial version so you may see actual operations before buying.

Work 365 is an automated billing systems and subscription billing solutions for Microsoft partners and software vendors.