Accounts payable mentions the amount owed to your suppliers for goods or services you bought on credit. A small error in the accounts payable process can place your business in jeopardy.
For example, your vendor delivered the ordered goods but you see that the charges are more than what was agreed. You look for corresponding purchase orders only to find that your employee has skipped the purchase order process as to get it approved is time-consuming and they wanted to take advantage of the early discount vendor offered. You are in a dilemma of what amount to pay the vendor. A single tiny error can mess your account payable process and relationship with the vendor.
Cloud-based intranet solutions can help you streamline the entire accounts payable process and maintain better relationships with vendors. If you are still skeptical about using a fully automated workflow management solution then here are some common challenges of a manually or semi-automated AP process.
Struggle in processing invoice variables
It becomes hard to process invoices with different variables like delivery format and layouts. An increase in volumes, variables, and complexity escalates the risk and final cost of manual processing as well as there is a need for intervention at a point.
Poor vendor invoice management
If your purchases are abundant, then the purchase transactions, as well as incoming invoices, are in piles. You can easily lose track of the due dates of invoices. Besides, missing invoices can be recovered from the vendor again but if you don’t notice the missing invoice it can be bad for the business. The vendor can call you and demand instant payment, which can hamper your relationship with the supplier as well as impact your audit readiness and dent your business reputation.
Data entry errors
Manually entering the data or rekeying can cause delays in the processing and increase inefficiency. Lack of data accuracy, whether manual or semi-automated can cause hindrances in processes down the road. If there is an error in entering details in the vendor invoice then it can cause incorrect calculations and payments that can dent your business finance.
For resolving the error there will be a need to check the spreadsheets manually. The time wasted in rectifying the manual error can be used productively in doing other core business activities using appropriate workflow management software.
Risk of fraud and duplicate payment
Manual and ungoverned processes are vulnerable to external or internal AP fraud and are often targeted. There are multiple fake invoices Accounts Payable teams receive, especially with businesses operating from several locations. Duplicate payments can impact cash flow unless you identify duplicate payments from the records, otherwise, the cash is lost forever.
Tips to reduce the AP associated human errors
If your accounts payable is manual and partially automated then it is error-prone. Choose online intranet software to make the accounts payable process better. It helps to save time and money in handling the AP process or fixing issues. AP automation enhances accuracy, avoid late payment fines, earn early payment discount, manage cash flow, and enhance security against fraud.
In this COVID-19 pandemic, employees are working from their homes. AP automation can help in handling business processes that include bill payment without any issue. Online database access allows the AP team to work remotely and deal with the purchase and invoice management easily.