If you are a small and medium business, you will surely be swamped with Accounts Payable problems which over time grow to create cash flow issues for your business. The best step forward for any small and medium business or a Startup is to be aware of these problems beforehand and take measures to happen beforehand.
As a remote accounting firm specializing in Accounts Payable, we work with businesses of all sizes to solve their AP problems and optimize their Accounts Payable for better cash flow. Here are the 5 common Accounts Payable problems we commonly fix for our clients.
5 Most Common Accounts Payable Problems and Their Solutions:
Slow processing: Slow invoice processing is the most common Accounts Payable problem faced by a business that adopts paper-based manual Accounts Payable. Scanning invoices, manual data entry, printing and signing checks – manual AP is both time and labour intensive. Each step poses the risk of delay ultimately leading to late payments.
What starts as a common issue in invoice processing over time grows as invoice volume increases to kick off a chain reaction of late payments, delayed gods shipments and bad credit ratings. Business as a result strain their relationship with vendors and lose their provision to negotiate favourable terms. The simplest and fastest way to increase processing speed is to identify the key AP stages that are taking up more time and leverage automation tools to speed up the process.
Manual errors: Manual data entry errors are by-products of manual paper-based AP. Given the manual AP already moves at a snail’s pace, a manual error pushes it further backwards while costing considerable time, money and resources.
Correcting the mistakes will send the team searching for the invoices and kick-starting the process right from the start – a tedious, attention and time demanding process that further slows down the whole process. The fastest way to solve this problem is to leverage OCR tools for automated data entry along with manual intervention. While automating the manual data entry tasks will significantly cut down the errors, manual intervention eliminates them from entering the AP system in the first place.
Missing invoices & Physical storage problems: “Having manual paper-based AP and a physical storage is the most effective combination to lose or misplace an Invoice”, said one of our clients at Back Office Accountants. It is back-bending work to get back at a misplaced invoice in a manual AP process. These problems are exacerbated when the businesses rely on physical storage systems which are outdated for documents that arrive in versatile formats.
An AP automation software can solve these problems by providing a centralized location that stores all the documentation and makes it easily accessible across departments. AP automation tools seamlessly automate routine tasks like coding, approval routing, vendor payments and reconciliation. Integrating your AP automation tools into ERP will ensure data consistency across the organization.
AP fraud and theft: A manual or even a hybrid AP without constant vigilance and tight controls is a ripe ground for AP fraud. Check fraud, e-mail fraud, duplicate invoices, and social engineering are some of the major causes of AP fraud resulting in an average loss of more than $125k in losses. A manual AP process, no matter how many controls are incorporated always presents an opportunity for fraud and theft. Businesses can choose to adopt robust security measures and processes to guard against AP fraud and it is only possible by digitizing the AP process.
Inability scale operations: Some businesses have their Accounts Payable KPIs in line with industry standards. Their invoice processing is error-free and swift with robust security for their current situation. Yet they encounter challenges when they aim to scale their AP operations when they are growing rapidly.
Businesses on their path to growth can consider partnering with remote accounting firms to leverage expert help. Outsourcing Accounts Payable to remote accounting firms gives them access to the best AP professionals in the market who leverage their AP infrastructure to scale their AP operations in line with the business’s requirements.
Back Office Accountants – Best Remote Accounting firm for Outsourced Accounts Payable Services:
As discussed above, automating Accounts Payable almost solves all the common AP problems encountered by businesses of all sizes. But not every business is equipped with enough resources or expertise to completely leverage automation and this is where Back Office Accountants can help.
As a premier remote accounting firm specializing in Accounts Payable Services, we are equipped with cutting-edge AP automation software and tools which are leveraged by our CPAs and AP resources to provide high-ROI Accounts Payable Services in line with your goals. If you are businesses that are looking to outsource your Accounts Payable Services, you can contact our AP experts here: https://www.backofficeaccountants.com/