Accounts Payable teams often have to walk a thin line between maintaining a strong supplier relationship and ensuring a positive cash flow. Organizations relying on manual and paper-driven processing cycles face inefficiencies across the accounts payable process cycle. Furthermore, AP teams have a complex mandate as they interact with vendors and other business functions. Without a streamlined workflow it could get disrupted
Cost of Accounts Payable Errors
Ardent Partners study estimated that half of the invoices are sent manually. This leads to delay in payment processing and also leads to errors or duplication in processing. Paper-based invoicing and maintaining manual records results in a lack of cost control, delay in payments and no spend visibility. Having a slow and inefficient accounts payable function can also disrupt vendor relationships, lower their service or delivery standards and damage the overall supplier goodwill.
Learn more: What’s next in account payable automation
Let’s first understand the 5 most frustrating challenges and then explore how Zycus’ advanced AP Automation Software helps in resolving these challenges.
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5 Accounts Payable Challenges
- Unauthorized purchases
- Slow Processing
- Payment of Invoice Before Receipt
- Data Entry Errors
- Manual follow-ups and Exception invoices
- Unauthorized purchases
Manual processing and inadequate controls result in unauthorized purchases. For instance, AP team members may spend time examining invoices of employee purchases that were made without any approved Purchase Orders (POs). Some other examples include the incorrect use of credit cards.
- Slow Processing
Paper processing leads to long approval cycles while documents might still be between departments resulting in a delay in payments. The situation can get worse if companies are still sending checks by mail.
Payment delays can result in multiple ill-effects such as late delivery of goods, late-payment fees, etc. Slower payments also hurt your organization’s credit rating, and have a long-term impact on your firm’s capability to get favorable terms from future vendors.
- Payment of Invoice Before Receipt
Timely payment of goods helps in earning supplier discounts. However, a constantly busy AP team may inadvertently pay invoices when they are received, without actually checking if the goods were delivered as per expectations. This can result in creating more problems, especially if the delivery is having quality issues or does not appear altogether. Paying bills can also restrict a firm’s cash flow and lead to reducing the firm’s liquidity.
- Data Entry Errors
Accounts Payable teams perform 3-way invoice matching to check that each invoice is correctly matching the PO and making sure that the goods have been received. Discrepancies between any of the touchpoints including invoices, receiving reports and purchase orders can lead to matching errors that often require a manual investigation. This is time-consuming and results in further delays and incorrect payments leading to hurting your company’s finances.
- Manual follow-ups and Exception invoices
According to a study by Aberdeen Group almost 20% of invoices contain incomplete or incorrect information. This causes Accounts payable teams to invest time in dealing with inadequate and incorrect information in invoices. Furthermore, it results in AP teams constantly spending their valuable time in resolving supplier inquiries and tracking down missing pieces of the puzzle.
Learn More: 5 MOST COMMON PROBLEMS IN ACCOUNTS PAYABLE THAT CFOS IGNORE
Solutions for Accounts Payable Challenges
- AP automation
- Automated 3-way Invoice Matching
- Early payment discounts
- Go Paperless
- Seamless Procure-to-Pay Cycle
- AP automation
Accounts Payable automation can automate a huge chunk of the routine tasks including payment and reconciliation, routing for approval, receiving invoices and coding. End-to-end automated AP process cycle will help in eliminating the need to input data manually at any touch point.
Furthermore, Zycus eInvoicing software powered by Zycus Merlin AI transforms paper invoices into critical data points. The built-in powerful analytics engine helps AP and finance teams to make accurate decisions and makes the process completely transparent. Data analysis for any anomalies such as unauthorized purchases, fraud and double payments is easy and can be done within short processing cycles.
- Automated 3-way Invoice Matching
Zycus’ automated AP software delivers robust matching leading to a ‘no PO no Pay process’ adoption. Furthermore, flexible Exception Management configuration results in generating payment-ready faster invoices. This empowers the AP team by improving the accuracy and efficiency of invoice management.
- Early payment discounts
AP teams need to maintain a fine balance between managing supplier discounts against making early payments and its impact on cash flow. Organizations that have cash on hand can afford to pay within 10 to 15 days and save typically around 1% to 2%. However, early payments can also end tying up cash which your firm can use somewhere else. Automating AP process can manage your payment processes and keep you from missing any cut-off dates and receiving discounts.
- Go Paperless
Accounts Payable Automation software can help in eliminating the paper-driven process and enhance the overall efficiency by almost 60%. Automated invoice extraction and 3- way matching of invoices will result in a significant increase in process efficiencies leading to soft dollar saving in addition to the actual hard dollar savings.
Eliminating paper becomes all the more important in today’s virtual world enabling better collaboration and agility between team members. AI-powered invoice automation enables ease of use and enhances user experience with cost center level data capture and budget management.
- Seamless Procure-to-Pay Cycle
An end-to-end procure-to-pay process that includes an AP Automation system is the way to move forward and future-proof your firm against any disruption. An integrated system ensures the flow of data is streamlined facilitating the generation of insightful reports and enabling data-driven decision making.
Conclusion
Inefficiencies in the accounts payable process can result in damaging the company’s financial health and also hamper supplier relationships. Implementing AI-powered AP automation software is key to unlocking higher savings, and driving towards your AP transformation journey. Zycus’ advanced AP automation software makes your organization agile and eliminates bottlenecks.
