AP Challenges And Solutions
Managing Accounts Payable (AP) can often feel like a nightmare due to challenges such as time-consuming manual invoice processing, late payment fees, and missed discount opportunities. These issues not only increase operational costs but also damage relationships with suppliers. However, the rise of AP automation is offering a brighter, more efficient, and cost-effective future, helping AP teams focus on more strategic tasks.
Let’s take a look at some of the biggest AP challenges and how platforms like AFusion can solve them, transforming AP from a “quagmire” into a key driver of business growth!
Too Many Paper Invoices
Paper invoices take up a lot of space and increase the likelihood of errors during data entry, leading to higher costs. In fact, according to PYMNTS, businesses spend an average of $171,000 annually to process paper invoices.
How AP Automation Helps: Automation solutions, like AFusion, allow suppliers to submit invoices digitally through dedicated portals, greatly reducing reliance on paper and significantly decreasing the challenges associated with paper-based invoicing.
Manual Data Entry
A survey of 10,000 office workers across 11 countries revealed that manual data entry is one of the most disliked tasks. Similarly, a recent study shows that 41% of buyers faced late payment fees due to errors in manual data entry.
How AP challenges are addressed by automation: AP automation significantly reduces manual data entry and the errors that come with it. OCR (Optical Character Recognition) helps extract data, but its effectiveness is limited with unstandardized invoices. A superior solution is IDP (Intelligent Document Processing), which provides higher accuracy and efficiency. The choice between OCR and IDP depends on the company’s goals and objectives.
Long Invoice Processing Time
One of the biggest AP challenges is the long processing time for invoices. A report indicates that the average time to process an invoice can range from 15 to 20 days, depending on the size of the company. This leads to delays and cash flow management difficulties. According to PYMNTS, delayed payments to suppliers often result in late payment fees, which affect 41% of buyers.
How AP automation helps: Automation speeds up invoice processing by enabling automatic approval workflows and resolving exceptions using AI. Research shows that 57% of survey participants believe automation leads to faster invoice approval, allowing quicker payments and improving cash flow.
Difficult Three-Way Matching
Manually matching purchase orders, invoices, and receipts is a time-consuming process that is prone to errors. This task requires careful checking of multiple documents, which can be tedious, especially with large transaction volumes. A survey found that only 51% of companies still use this manual process because it is complicated and inefficient. Many businesses are now seeking automated solutions to streamline the process and reduce errors.
How AP challenges are addressed by automation: Automation platforms store all necessary forms in the cloud and automatically link them to specific transactions, minimizing the time spent searching for documents and matching them manually.
Missing Early Payment Discounts
Late payments are one of the biggest AP challenges, negatively impacting financial health. Many suppliers offer early payment discounts, but businesses often miss out on these opportunities due to slow payment processes.
How AP challenges are addressed by automation: AP automation reduces late payments, enabling businesses to make early payments, take advantage of discounts, and avoid late fees. PYMNTS research also reveals that automation can help businesses save up to 11% of their wasted spending.
Internal Communication Issues
AP processes can be highly complex and fragmented, involving multiple departments at various stages. This often leads to communication breakdowns, delays, and confusion over responsibilities, which can result in a lack of clarity about the next steps. The complexity of coordinating between different teams can slow down the process and increase the likelihood of errors, affecting overall efficiency.
How AP challenges are addressed by automation: Automation platforms address these challenges by providing a centralized hub with real-time visibility into invoice status, detailed notes, and clear communication channels. This ensures that all departments are aligned and informed throughout the entire AP process.
Supplier Payments
Some AP challenges and automation platforms don’t integrate payment functions, forcing businesses to use different systems for payments, which can lead to errors and inefficiencies.
How AP automation helps: Solutions like AFusion address this AP challenge by automating supplier payments, reducing manual steps, preventing errors, and ensuring timely payments. This strengthens supplier relationships and avoids late payment penalties.
Fraud in AP
According to the FTC, U.S. consumers lost over $10 billion to fraud in 2023, highlighting the growing risks in finance. Fraud in Accounts Payable (AP) can occur both externally, such as through email scams, and internally, such as employee fraud, posing significant threats to businesses.
How AP automation can help: AI bots in AP automation systems can detect signs of fraud, including unusual transactions or duplicate payments, helping protect businesses from these risks. Nearly 90% of companies in a survey said automating their AP systems could improve visibility and transparency of payments
Reconciliation and Audit Readiness
End-of-month reconciliation can be the most stressful period for AP departments, especially when using manual methods to match records with financial data. Missing invoices only add more stress, causing employees to work overtime.
How AP challenges are addressed by automation: AP automation, supported by AI and machine learning, automatically reconciles financial records and stores essential data in an electronic format, making it easier and more accurate to prepare for audits.
Don’t let AP challenges discourage you. See how AFusion can help optimize your AP process and transform your business’s financial operations.
Turn accounts payable challenges into a competitive advantage. Contact us now to get customized solutions for your business! You will see significant positive results.
Email: sales@afusion.ai
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