Being of the most crucial functions of accounting, Accounts Payable is responsible for timely payment of all the bills of an entity which paves way for the smooth functioning of its business. For any business that has to process large volume invoices, the manual AP process can be daunting without an effective and streamlined system in place.
Every AP process has its own set of problems and when they are not dealt and sorted out immediately they quickly impact the business functioning in the form of lost opportunities, additional penalties, expenses, and even strained vendor relationships. If you are a business owner who is looking to optimize your AP process, you need to know the possible AP problems and mistakes that can happen in due course and the ways to correct them when they arrive.
Here are the 4 most common mistakes of manual Accounts Payable process and tips to sort them out respectively:
- Manual Errors in Data Entry:
Data entry forms the pillar of manual AP process for that matter any accounting process and unsurprisingly manual data entry errors are the most common mistakes that can have serious repercussions. And now that we are talking about Accounts Payable which is money owed to the supplier and vendors simple mix-ups can result in complex and costly errors that cost both time and money because a manual process again requires manual verification too.
If you are a business that has to process a large volume of invoices manually you can invest in document scanning system that offers OCR (Optical character recognition). These systems automatically scan the invoices, relevant data us located using character recognition, and questionable data elements are filled using data operators to give error-free data entry process.
- Misplaced or Disappearing Invoices in Manual AP:
Especially in a small and medium business where the volume of invoices is large and multi-tasking is rife, suffer a risk of misplaced or lost cases of invoices. This case can further delay the invoice processing or even stall it, either way, you fall behind the invoice processing and replacing them replacement invoice-copies from the vendors or suppliers in manual AP can further delay the process, especially during this pandemic.
Businesses which commonly suffer from these problems can resort to e-invoicing where payment is electronically presented using integrated electronic payment methods. Given e-invoices also includes a variety of documents from invoices, remittance slips, credit notes, debit notes, purchase orders and more, your entire accounting process can save time, reduce error, improve workflow solve any payment disputes in minutes.
- Slow and Costly Processing of Invoices:
Imagine having a manual AP process that is plagued by misplaced invoices, topped up data entry errors that result in delayed and faulty payment and time invested to get things right, costly right? Given the whole manual AP, the process is slow and diligent, the errors and other processing problems ca further bog down the process which can cost both time and money which both are in short supply during this pandemic.
If you are a business resorting to manual AP process that is bogging down your payment obligations, automating your AP process accelerates the whole process by almost 5 times in comparison with manual AP. This allows you to procure streamline the process, improve cash flow, procure early discounts while minimizing errors.
- Payment issues – Missed, delayed or duplicate payments:
Missed, delayed and duplicate payments conveniently tops the list of most common mistakes of an AP department in a business. They are in majority of cases result of manual data errors, misplaced invoice processing which are common too. Given you are working with the vendors and suppliers, wither of the mistakes causing payment issues reflects poorly, attract late payment fees and can also strain the valuable relationships with the vendors or suppliers.
In addition to manual data errors and invoice documentation problems, complicated and lengthy approval cycles are also one of the reasons for the payment issues and these can only be sorted out by streamlining entire process using automated accounts payable system. An automated account payable process automates each step of the AP process, integrates and streamlines them to give you maximum visibility and control to optimize the cash flow.
If you are a small and medium business owner who is looking to optimize your AP process, automation is the right choice. However, if you want to look for easiest way to leverage all the benefits of automated AP system from accounting experts we recommend you to outsource Accounts Payable to our experts at Back Office Accountants. Being one of the best back-office accountancy firms in the business we have helped hundreds of business leverage the complete benefits of automated Accounts Payable with our Remote Accounts Payable Services. For more information, you can contact us here: https://www.backofficeaccountants.com/