Working in the AP department often involves careful reviews, constant updating, and tedious attention to detail. Failure to pinpoint and correct inefficient procedures can quickly turn the AP process into a fiasco. Discover five factors to consider as the team pulls together to streamline and improve the AP process.
Long Lead Times to Process Invoices
Invoices should be processed promptly, which is nearly impossible for AP departments using manual or semi-manual processes. It seems to take forever to go through a growing stack of invoices. The result is long lead times to process invoices, which can cost the company money and compromise relationships with suppliers. AP professionals often get tangled in the web of indirect spend, or invoices without a corresponding PO. Trying to find the budget holder and get approval becomes a time-consuming process. The AP team gets frustrated, the suppliers are unhappy when they get paid late, and the organization suffers as a result of a poor AP process. Using an AP automation system resolves all of these hassles.
Losing Control in the AP Department
Some companies begin to accept a lack of control in the AP department. A single, streamlined system is a necessity in a company, not a luxury. Investing in AP automation software streamlines the workflow and establishes a system of guidelines for employees to follow. Rules are established for handling invoices, regardless of the forms they come in reducing errors or eliminating them completely. New employees are easily onboarded with a firm set of guidelines everyone follows. A loss of control in the AP department opens opportunities for security risks and fraud. Oversight is crucial to ensure accuracy and detect fraudulent behavior and possible security breaches.
A Distressing Month End Closing Process
Often the AP department and entire company dread the month end closing process. When the AP department struggles to hash through manual tasks, it means spending long hours to complete the work. And it can become impossible to ensure accuracy when people are working for endless hours trying to rush through this detailed work. Unfortunately, this can have a negative impact on the organization’s bottom line. Accurate financial reports are the backbone of company operations. Automation makes this process notably easier for the AP team. Automated AP solutions can cut days from this essential process.
Poor Supplier Relationships
Suppliers expect to be paid on time and want positive relationships with customers. And companies depend on suppliers to help them distribute essential goods and services. These relationships must be respected and nurtured. The most significant way to do this is by paying suppliers before the due dates. An inefficient AP process sabotages supplier relationships. The company could lose money due to inaccurate records and damage supplier relationships. Other costly mistakes may also arise, such as overpaying suppliers and duplicate payments. A slow invoice process also costs the company money if they can’t take advantage of early payment discounts from suppliers. AP automation shortens the time and effort from receipt of invoices to payment. Efficient processing can improve the company’s credit rating and eliminate late payment fees.
Lack of Financial Clarity
The C-suite must have immediate access to the current state of the company’s finances. Financial clarity is crucial to make well-informed business decisions. In some situations, financial disclosure is a legal requirement. AP reports reveal cash flow and outstanding invoices to gain insight into the company’s financial picture. Organizations must be prepared for disclosures or audits in the future. AP automation solutions put these results into the C-suite’s hands in real-time.
Instead of scheduling endless meetings to figure out why financial issues exist, start searching for the right AP automation solution. Improve the AP process immediately and see an ROI in just one year.