There is no shortage of challenges facing the accounts payable department. These inefficiencies may be a minor inconvenience or create major issues for your business.
Slow Invoice Processing Times
Slow invoice processing costs business owners both time and money.
According to Ardent’s State of ePayables 2023, 49% of survey respondents felt that invoice approval was too slow. In most cases, the culprit is the use of a manual AP system that creates bottlenecks when processing even routine invoices.
Invoice Reviewing Delays
Mistakes happen to the best of us.
Unfortunately, if you or your vendor are using a manual accounts payable system, those mistakes can seriously impact the entire AP process.
Issues like duplicate invoice numbers, invoices billed in the wrong amount, or incorrect quantities, services, or products listed on an invoice are all fairly common when an automated system is not being used.
And any issue that is flagged during review requires further investigation, which will delay invoice processing even more.
Matching Issues
Accounts payable management should always include three-way matching, which matches an invoice to a purchase order and a shipping receipt (or goods received note).
The purpose of three-way matching is to determine the authenticity of the invoice.
However, every time there is an error in the three-way matching process, it requires investigation, which again, will impact the entire accounts payable department.
Duplicate or Unauthorized Payments
Duplicate payments are a common problem when AP processes aren’t followed. A duplicate payment often results from manual input errors or not properly recording invoice payment.
Unauthorized payments are another common issue. Sometimes these unauthorized payments result from a payment made before goods or services are received.
At other times, they result from an employee circumventing procedure to process a payment for a supplier requesting immediate payment. Unauthorized payments can also be the result of employee fraud.
Lost or Misplaced Invoices
One of the biggest delays in processing invoices is getting them approved promptly.
Even if an invoice is reviewed for accuracy and matched with a purchase order and shipping receipt, a manual approval process can significantly delay processing.
It’s not unusual for invoices to be shuffled from department to department, with no one aware until a late payment notice arrives.
At other times, the invoice sits on someone’s desk, waiting to be approved. In all cases, this delay can be expensive, resulting in lost discounts, late payment fees, and even ruined vendor relationships.
Having good invoice dispute management processes in place can help maintain better vendor relations but avoiding the dispute in the first case is better.
In most cases, these challenges can be significantly reduced or eliminated by establishing set policies for accounts payable and making the switch from paper processing to an automated accounting system.