As major companies continue integrating automation technology into their operations wherever possible, departments across the board must assess their individual and group practices. By identifying pain points in their processes, they highlight any potential for performance enhancement.

It’s fair to say that AP automation is undeniably altering the industry landscape, impacting expectations of what should be realistically possible. An understanding of what constitutes excellence in efficiency and accuracy is evolving to match.

It is impossible, however, to overlook the various challenges an accounts payable team can face on a daily basis. Particularly, businesses using manual, paper-based AP processes are finding themselves plagued by a litany of common stumbling blocks.

The most common problems Accounts Payable teams face today 

Across all industries, accounts payable departments strive for efficient operations, implementing workflows and guiding practices to cement positive vendor relations and, critically, proper invoice processing costs. To achieve these ends, teams must overcome the issues and problems that impact teams throughout the field. 

Invoices Issues

• Missing/Disappearing Invoices. Unfortunately, the hectic nature of accounts payable is a natural environment for invoices to disappear, and the consequences are significant. Missing invoices inevitably lead to undesirable impacts on vendor relations. Additionally, missing invoices result in time-consuming, frustrating efforts to address inconsistencies on the balance sheet.

• Duplicate Invoices. Similarly, duplicate invoices negatively impact balance sheet accuracy and vendor relations. Generally a result of human error (when AP automation systems are not involved), duplicate payments require time and resources to clear up and will result in profit reduction on the vendor side, as well. 

• Unauthorized Purchases. While the cause behind them may vary, unauthorized purchases inevitably result in a significant drag on time and labor. Following correct purchasing procedures is essential for operations to function seamlessly.

Processing Pains

• Matching Errors. When matching errors occur, the time-intensive, complex investigations that occur cause extensive delays, robbing your team of valuable resources while simultaneously delaying the myriad of tasks and projects that should be moving forward.

• Exceptions. Exceptions are one of the primary drains on any Accounts Payable department’s operational efficiency. Whether incorrect, incomplete, or non-matching, invoice exceptions require intensive time and effort to resolve.  

Payment Problems

• Payment Delays. Potential causes for payment delays range from human error during processing to inefficient workflows, payment method complications, system limitations, and more. Regardless of the instigating factors, payment processing time has been a significant pain point for many entities. Ensuring a smooth experience from start to finish is essential for sustained quality relations. 

• Payment Errors. Self-explanatory, frustrating, and, thanks to AP automation, increasingly simpler to avoid, payment errors hinder workflows and damage vendor relationships. With the human element in play, errors are inevitably difficult to avoid. AP automation technology transfers this responsibility away from employees, shifting their efforts to more beneficial uses of their time.

• Payment Before Delivery. One important safeguard against unnecessary, time-consuming work is to avoid payment before delivery. Confirmation that the delivery was completed and the shipment was in satisfactory condition should be obtained before any payment has been processed.

• Payment Methods. When a mismatch exists between the payment methods utilized by buyers and suppliers, the process goes from straightforward to complicated, potentially damaging vendor satisfaction and delaying further momentum for impacted departments. Providing limited or outdated payment methods can result in a frustrating pain point for all parties involved. 

Fraudulent Fears

Today’s criminals evolve with ever-improving technology and fluid business practices more adeptly than ever. Given this, it’s an essential priority that AP departments are on guard against potential fraud. Given the specific operations involved in AP operations, the accounts payable field is at particular risk for fraudulent activity.

Frequent Frustrations

• Storage Stress. As the industry evolves in a futile effort to match the breakneck speed of technological innovation, one thing becomes strikingly obvious: businesses can and should move on from physically storing, maintaining, and archiving paper invoices. Electronic document storage’s benefits include cost-savings, increased efficiency, and fraud prevention. 

• Data entry. Manual data entry is a particularly weak link in the invoice process. Known to be universally despised, manual data entry is susceptible to human error and inefficient effort. All too often, this step of the process will morph into a dreaded bottleneck, hampering streamlined workflows. 

Essential best practices and cutting-edge solutions for AP processes

By implementing best practices and integrating automation solutions, accounts payable departments are fully equipped to decisively address any issues plaguing their operations, reducing the accuracy and efficiency of their work. 

• Adopting paperless technology. One element of adopting paperless technology is eliminating paper checks, a decision that provides various benefits. Most notably, a massive reduction in storage needs and archival responsibilities. Removing the security risk of paper checks is particularly important, as they are known to be a primary target for those who commit fraud.

• Protection against fraud. One of the most valuable aspects of quality AP automation software is integrated fraud protection. Automated fraud prevention safeguards include built-in payment controls like segregation of duties and dual-factor authentication. As mentioned above, shifting away from paper checks significantly decreases the risk of fraudulent activity, as does establishing a centralized database.

• Self-service vendor portals. Vendors rejoice! Self-service vendor portals enhance vendor relationships on several fronts, from streamlining communications regarding payment status and providing great visibility into the entire process to helping ensure on-time and secure payments. 

• Streamlined workflows. When utilized effectively, AP automation software empowers AP teams to streamline many workflows thoroughly. Teams can be unaware of potentially unnecessary, redundant, and even counterproductive steps in their current workflows and standard operating procedures. With AP automation, AP departments can ensure established processes are free of inefficiency and feature the lowest security risks.

• Three-way matching. Once purchase orders, receipts, and invoices have all been captured, AP automation software completes three-way matching to ensure accuracy and safeguard against potential fraud. Three-way matching compares each piece with the related documents; if they match, the system automatically approves the invoice; if there is any discrepancy, however, it automatically flags those exceptions for review.

• Improved systems integration. AP automation technology must be fully integrated into relevant business systems to achieve peak internal efficiency and a broader benefit to company operations. AP automation is designed to seamlessly interact with related core business systems, including enterprise resource planning and customer relationship management. This quality, reliable integration facilitates a steady data stream and more efficient processes.

Streamlining Accounts Payable Processes through Automation 

Any department would jump at the chance to streamline any portion of its unique, time-intensive, tedious tasks. Few of those teams are as ripe for practical automation as Accounts Payable. A seemingly endless stream of problems and pain points can cause chaos. Thankfully, AP features a substantial amount of manual labor duties primed for automation.

It is true, naturally, that AP automation won’t benefit every single business. To the relief of AP managers everywhere, though, it can be for many enterprises. Any company ready to discard the disorganized processes and outdated systems that unnecessarily hinder their AP teams can rely on the experienced professionals at DCI to help them take the next steps.

Written By: Daniel Redding
Date: February 2023