Accounts payable management is a critical operation for businesses worldwide. Many AP teams often feel like they are walking a tightrope between maintaining optimal cash flow, following internal business procedures, and keeping suppliers happy. The challenge becomes even more profound if a company has turnover in AP stauffing or relies on inefficient practices, such as inconsistent approvals, processing paper-based invoices and checks, or relying solely on physical files or spreadsheets to maintain records.
Fortunately, the payables industry is no longer a mere operational necessity with little room for optimization. Technology is moving into the sector to replace legacy processes. Today, useful solutions like Sudozi exist to reduce manual AP workload, eliminate human error, and save you money, all while keeping your suppliers happy.
The first step toward dealing with AP challenges is to identify them. Below are some common nightmares that AP professionals face every day. You may be able to relate to a few of them, and we’ve provided some pro-tips if you face these at your company.
In a typical AP process, the accountant receives an invoice, gets it approved, and processes the payment. Manual data entries along these steps increase the possibility of errors tenfold.
A mistake in data entry, sign off, or processing can lead to incorrect calculations, missed approvals, and erroneous transfers. Furthermore, when errors occur, AP teams often have to go through cumbersome spreadsheets manually until they find them. This process wastes time and affects morale.
Pro-tip: If you receive electronic payments, encourage your team to use copy and paste when entering data into payment systems. If writing checks manually, have a second line of defense where the person who signs the check is someone different from the person who writes it and can double check the data.
Manual AP processing can be thoroughly inefficient. Some businesses require all invoices to pass through a single person for approval before payments are processed, which can create bottlenecks. Failing to remove the bottlenecks along the entire payment process can motivate employees to cut corners to finish their work faster. When these shortcuts fail to come to light on time, they can severely affect your finances.
Pro-tip: Create processes with parallel approvers and work streams so that a single person doesn’t become the bottleneck. You can also set a default action if the requested response doesn’t happen in a certain time period. For example, if approver A doesn’t respond in 3 days, it will automatically be escalated to approver B.
In AP, suppliers often send another invoice if the first one has not been paid off in time. The problem with this practice is it increases the probability of making duplicate payments. The chances are even higher if your business operates from multiple locations. A supplier might send the first invoice to one branch and the second to another. Duplicate payments adversely impact your revenue and cash flow, and you may not be able to get the payment back even if you identify it.
Pro-tip: Double check the invoice number and payment amount before making a payment to a vendor. You can also set up rules that escalate alerts if a single vendor is about to be paid twice within a short period of time.
Maintaining close ties with suppliers has several key benefits, from reliable supply and accommodation for short-notice ordering to flexible payment terms and discounts. The friendlier you are with your suppliers, the more inclined they will be to support your business long-term.
Pro-tip: Assign internal vendor owners who are responsible for keeping track of key relationship information since as service expirations and key individuals at the vendor you can reach out to as needed. You can use a tool like Sudozi to help manage vendor owners and key people on the vendor team.
In addition to the pro-tips, if any of the nightmares above speak to your situation, you can also tackle them by implementing additional overarching strategies.
Automation is the most impactful solution to common AP nightmares. With technology, you can manage your accounts payable faster and more accurately. For starters, replacing paper with electronic documentation can stop you from losing invoices, missing payments, or paying double, and protect both your cash flow and your vendor relations.
The right solution can also help you bid goodbye to time-consuming and error-prone manual data entries. If you invest in accounting software that comes with a scanning feature, data entry will be as easy as scanning a document and uploading it as a purchase transaction.
Most accounting software also offer automated reminders to keep you on top of your payments at all times. With a system like Bill.com, Stampli, or Tipalti, you can have continuous visibility of your paid and unpaid invoices and make all payments in good time.
Every business dreams of a smooth purchase transaction, but few make it a reality. AP automation can streamline the entire workflow, from issuing orders and seeking approvals to reviewing invoices and making payments. With a solution like Sudozi, you can automate your spend request workflow so that approvals take a few seconds instead of hours or days.
Workflow automation can eliminate unnecessary bottlenecks and reduce delays, translating to timely ordering and payments. Most importantly, the best software solutions can adapt to the accounting processes you already have. You do not need a complete restructuring to automate your AP workflows.
Accounting software solutions enable you to maintain digital records of all transactions in one centralized place. A digital solution like Sudozi can centralize your vendor documents and make storing, searching, and retrieving documents as easy as a few clicks.
Sudozi also provides a comprehensive dashboard from which you can see all the critical supplier information. You can update payment terms and vendor details regularly, and everyone on your team will have the synced up-to-date information rather than relying on disjointed spreadsheets.
If you choose a cloud-based solution, you get the added benefits of 24/7 data availability, security, and regular backups. Such a system also boosts your legal compliance since you can store your business records safely for years and retrieve them with ease when needed.
If your accounts payable is underwater and facing inefficiencies, now is the time to embrace automation. Technology can shield you from making costly errors and losing vendors and contracts. With the right solution, you can instill order and efficiency to your AP processing and spend your time building relationships instead of fixing them.