Being raised by parents who were nature enthusiasts, our house never had a shortage of books or magazines about the great outdoors. National Geographic, Outdoor Life, Mother Earth News — you name it, we had it lying around.
One book that I’ll always remember was the Birds of Wisconsin Field Guide. Admittedly, I never paid much attention to it growing up — I was more of a reptile kid myself — but to my parents, it was their ornithological bible. Despite already knowing a ton about birds, they used it as a guide to distinguish similar looking species, attract more of their feathered favorites, and even dissuade “bad birds” from making their home in my parent’s backyard.
This got me thinking: Wouldn’t it be great if those in accounts payable management roles had a similar guide?
I get it … birding couldn’t be more different than managing an accounts payable (AP) department, but really, who couldn’t use a handy resource to help them avoid the bad and maximize the good in whatever their passion is?
Top 5 Pains Ailing Your Accounts Payable Management Team
The truth is, accounts payable management doesn’t need to be lectured on how to run a successful AP department. However, it’s never a bad idea to stay informed on the main pain points in a traditional AP process and the potential solutions to fix them. With that in mind, I hope you’re able to use the field notes below to be your own guide and better navigate your AP landscape.
First, let’s start by identifying the top 5 pains affecting today’s accounts payable management teams:
- Manual data entry. Increased errors and payment cycle slowdowns, higher costs, lower staff productivity, unhappy suppliers — talk about a laundry list of side effects! Each moment your educated AP staff has to spend manually entering data before an invoice can be approved represents lost value for your business. Avoid at all costs.
- Getting approval. Ah yes, the waiting game that no one ever seems to win. In a manual environment, supplier invoices often get routed for approval only to sit in a state of limbo on someone’s desk or email inbox, slowing the payment cycle down to a crawl. And do you know who passes their competition by crawling? Nobody.
- Handling exceptions. Exceptions are unavoidable but that doesn’t mean they shouldn’t be accepted, no questions asked. According to 2015 Ardent Partners research, 17.8% of supplier invoices cause exceptions in a typical company while “best-in-class” companies have a 9.8% average. That’s a significant difference considering the crippling effects exceptions can have on AP efficiency.
- Late payments and missed discounts. The double whammy of AP agony. Not only does getting into the habit of making late payments mean your team is not operating at peak efficiency, it has the obvious potential of damaging valuable supplier relationships (i.e., fewer early-payment discounts and less generous terms).
- Lack of tracking and reporting. According to the Institute of Finance & Management, only 15% of AP departments currently track their metrics with technology like dashboards that display data. That makes it harder for staffers to prioritize tasks, managers to measure team performance, and finance executives to get the cash flow visibility they need.
Why AP Automation Is a Cure-All
After examining all the pains that so many of today’s AP teams face, fixing them might seem like an uphill battle. Nah … not if you have the right tools helping you along the way and know how to spot a good solution when you see one.
Automated AP invoicing is one of those tools, and arguably, the tool.
Automation works so well for AP because it enables businesses to streamline their entire workflow process — from the capture and extraction of invoice data to automatic dispatching for approval to customizable dashboards displaying key metrics. The benefits truly span the entire invoice settlement process and positively impact every user.
These benefits include:
- Reduced overall costs
- Improved supplier satisfaction
- Increased payment discounts
- Enhanced reporting and analytics
- Accelerated payment cycle times
- Eliminated duplicate payments
- Strengthened credit rating
- Greater support for regulatory compliance
Want to learn more?