Imagine your small company is scaling up from being a small business to reach the mid-market, receiving more and more invoices with an accounts payable team that can’t afford to grow in direct proportion. Perhaps you’ve always operated in the mid-market but are simply unable to justify hiring more employees just to support accounts payable. In either situation, your company may run into the following issues, which normally have rather costly solutions when implemented manually. Where solving these problems using manual means fails, it may be time to look toward automating your accounts payable using a platform from a bank or a fintech firm for the most cost-effective solution.

Pitfalls of a Paper-Based Organization

Paper-based AP operations lack visibility into invoices and other AP documentation across the company due to many of them being physically centralized in the accounting department. Organizations also lack a holistic view of all invoices related to a specific vendor or project outside of accounting systems, many of which are priced per user.  There are also a variety of other costs incurred with paper-based processes. These can come in the form of printing, storage and most urgently, labor hours. AP automation can help to solve issues in this area by providing a space where documents can be digitally filed, processed, and organized to meet organizational and project needs while giving access to a wider range of employees without the time consumption of contacting the accounting department every time a document is needed. Automated approval processes and the resulting reduction in paper also reduces labor hours.

Inefficiencies of Matching Invoices to Purchase Orders and Receipts

Purchasing, receiving and accounts payable typically take place in three separate departments of an organization. However, knowing that goods or a service were received (partially or in full) is critical before paying a vendor. Without automation, most organization perpetuate the paper shuffle and confirm receipts manually before paying invoices. In addition to being terribly labor-intensive and difficult to audit, it is also time-consuming and often takes so long that discount windows are missed or worse, payments are late. AP automation that supports the full procure-to-pay cycle often include automated three-way matching which ensures that only valid invoices are paid and provides the ability to store the relevant documentation in a single system.

Inability to Effectively Manage Cash According to Business Needs

Managing cash properly requires visibility and access to the most accurate, up-to-date information possible. Traditionally, the decision makers of the company will have to delegate or spend their own time answering several individual questions concerning outstanding AP, the due dates of various invoices and whether discounts may be available. Consolidating this data into a single AP automation tool allows for better access and more control. Considerable savings can be achieved between the time saved by not having to dig through documents and the improved quality of cash-related decisions.

Risk of Payment-Related Fraud

An issue as old as accounting itself, fraud can occur at any stage in the cycle of processing invoices and other documents through your company’s accounting department. By partnering with a fintech company or a trusted bank to help process accounts payable, you can cover your bases in a multiple ways. First, you eliminate some steps from the AP process, limiting the opportunity for fraud take place in each transaction. Also, as transactions move online, a fintech or banking solution may offer ways to automatically detect various types of electronic/online fraud that are difficult for an employee to spot without extra training.

Difficulty Handling Large Amounts of Vendor Inquiries

One of the more stressful aspects of working in accounts payable is the very real possibility that there can and will be confusion with some accounts. Questions about whether an invoice was received, if it has been approved, and when payments will be made can take up a significant part of an AP team’s day. By using AP software, however, you can provide vendors access to a portal to check approval and payment status and save both themselves and your company valuable time. This and other quality of life features such as having a single place to store a vendor’s contact information, W9, preferred form of payment, and verification of payment details can take stress off your AP team and improve vendor relations.

Receiving, processing, and paying invoices can be a daunting task for an AP team, especially for growing companies in the mid-market where volumes are high and maintaining relationships with vendors becomes a more important and time-consuming part of your business. By making use of AP automation, these tasks can become much easier, as those working on accounts payable will not have to address every individual concern of vendors and fellow employees alike. This allows them to ensure all invoices are paid on time, in the correct amount with the least difficulty possible to give your company in edge over competitors in both efficiency and reputation.