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Common Accounts Payable Challenges and How to Solve Them

Paying suppliers is not easy for most accounts payable (AP) departments. 

According to the Institute of Finance and Management (IOFM), controllers believe that AP is the most labor-intensive, time-consuming, and paper-intensive finance and administration function, topping notoriously burdensome tasks such as accounts receivable, tax and reporting, and payroll. 

Receiving, approving, and posting supplier invoices often involves a complex series of steps that frequently costs too much, takes too long, creates too many errors, and provides inadequate visibility.  

Inefficiencies in the invoice processing cycle – whether invoices arrive as paper through the U.S. Postal Service or electronically through email, a supplier portal, or fax – also are a drag on a business, complicating cash forecasting and spend management, and straining supplier relationships.   

The most common challenges in invoice processing affect businesses of any size, in any industry.  But the problems associated with invoice processing often grow as a business gets bigger.  Geographically dispersed staff, multiple currencies and languages, myriad tax regulations, and multiple systems of record make extracting, validating, and posting invoice data much harder.

Top AP pain points

Every digital transformation project must start with an honest assessment of where the organization currently stands.  After all, you cannot fix what you cannot measure.  While every AP department will face unique challenges, there are six common challenges in processing supplier invoices.  

  1. High costs.  Every business wants to do more with less.  But it costs more than $6 for an AP department to manually process a single invoice, IOFM reports.  And that doesn’t account for the significant labor costs involved in resolving inevitable errors caused by miskeyed data.  
  2. Low staff productivity.  All the time that AP staff waste on manual tasks such as keying invoice data, shuffling paper and emails, chasing down information, and fixing errors and mistakes is time that they cannot spend on growth-generating activities such as data analysis.  In a manual AP department, strategic tasks always seem to get pushed to the back burner.  
  3. Errors and mistakes.  Wherever there is human intervention, there will be errors.  A single miskeyed character can result in downstream headaches and potential financial losses.  It’s also easier for an invoice to erroneously get approved for payment before someone realizes that the invoice data doesn’t match up to purchase order information residing in the ERP.   
  4. Slow invoice approval times.  If it feels like it’s taking your AP department longer to get approvals on invoices, you’re not alone.  At many businesses, AP staff can never be sure who should approve the invoice, they don’t have visibility into the status of the invoice, invoices can sit in the inbox of an approver who is out of the office, and there’s no tracking of actions taken on an invoice.  Slow invoice approval cycles can result in late-payment penalties, missed early-payment discounts, more angry phone calls and emails from suppliers, and difficulty forecasting cash.  And any invoice exceptions can result in weeks of back-and-forth emails and phone calls between internal and external parties trying to get to the bottom of things. 
  5. Inadequate visibility.  It’s hard to access information on invoices and payables documents when you rely on manual and semi-automated processes.  In these environments, key data is not captured, captured information is not accurate or complete, data is poorly organized, systems are not integrated, and information is not timely.  Just think about all the time that AP staff waste rifling through file cabinets to search for invoices during audit season. 
  6. Fragmented systems.  Cash forecasting and spending management mean more in uncertain economic times like these.  But poor integration between AP processes and systems of record can make it difficult for decision-makers to access the variables they need.  As a workaround, many AP staff frequently re-key data into legacy systems or create spreadsheets for reporting.  What’s more, poorly integrated finance systems make it possible for duplicate payments and fraudulent transactions to slip through the cracks, chipping away at corporate profitability.   

These are the most common challenges holding AP departments and their businesses back.  

The benefits of cloud capture technology

Cloud capture helps AP departments overcome their biggest invoice processing challenges.

  • Reduced costs. Cloud capture solutions consolidate all invoice capture processes onto one, pre-integrated platform.  Content can be captured from multiple diverse input sources.  
  • Higher staff productivity. Cloud capture solutions eliminate the need to manually enter invoice data, re-key information into systems or records, or shuffle paper or email invoices. Integrating with enterprise resource planning (ERP) applications, accounting software, and other legacy systems means no double-keying of data, toggling between systems, or fixing inevitable errors. AP departments also can add unlimited bots and users to scale fast.
  • Faster invoice approvals.  Automatically extracting, validating, and routing invoice data wipes out friction in the invoice processing cycle, ensuring that approvals keep moving. 
  • Better accuracy.  Automating the capture and validation of invoice data reduces the possibility of errors.  Artificial intelligence (AI) automatically extracts and classifies data from any source, including unstructured documents.  Machine learning reduces human intervention and errors over time by understanding how data should be captured.
  • Enhanced visibility. Cloud capture seamlessly integrates with existing content management systems, making it easy for AP staff to search and find information from a single platform.
  • Connectivity.  Robotic process automation (RPA) connects AP with legacy systems, limiting mistakes and errors and freeing up AP staff to focus more time on higher-value activities.

From reduced costs to better system connectivity, cloud capture solutions eliminate challenges across the invoice processing lifecycle, better positioning AP to be a strategic partner to the business.

Why automate accounts payable

There’s a lot resting on the shoulders of AP departments these days. But cloud capture technology can help AP overcome these challenges and drive business success. 

If your business is looking for ways to overcome high costs, low staff productivity, too many errors, long cycle times, inadequate visibility, or fragmented systems, ibml wants to speak with you. 

Contact us to chat about your needs or arrange an online demo of our cloud capture technology.

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