As a back-office accounting firm, our Accounts Payable experts at Outsourced Bookkeeping routinely identify, strategize and fix complex AP problems that are copping massive hits for our client’s invoicing processing and revenue, burning them large sums of money every year.
The most interesting aspect of these AP problems is that all of them can be tracked to simple AP errors that were not fixed readily. A lax PO system, elusive data entry problems, matching errors or even as basic as paper-based processing. All the inefficiencies and errors blend to hurt a business’ burning excess time, money, time and even giving leeway to financial fraud.
So the two simple ways to fix or even prevent the damaging AP process is to have an organized AP process and nip the Accounts Payable errors right in the bud. While the first step does take time can even need a massive revamp, the second step is simple with the right information which you are going to find in this blog.
Identify Errors in Accounts Payable Process:
Even when the entire AP process is thoroughly managed a single error can cascade into multiple errors resulting in loss of time and money for an AP team. So identification of common AP errors is the first step a business must take to nip those errors in bud and prevent the damage caused by the AP problems successfully. So in this blog, we are going to list out common AP errors that can hurt your business but that can be readily fixed with enough assistance. So read on:
4 Common Accounts Payable Errors That Can Hurt Any Business:
Payment Delays: Payment schedule is the pulse of AP – a delay is an indication of an inherent problem in the workflow that needs to be addressed.
Wrong entry in the books, missing invoices, insufficient funds, and a long AP approval process with multiple touchpoints – a simple payment delay can indicate the problematic aspect of your AP process that one can focus their efforts on.
Delayed payments lead to penalties, impact credit rating and more importantly strain business relationships with vendors. Payment delay is a serious problem that indicates a host of problems; so the first sign of it – make an audit and evaluate the problems – our back-office accounting firm can help in this regard.
As said, payment delay is the most general and common type of AP error that every business must be wary of. Let us now dive into more specific AP errors.
Matching Errors: Mismatch of invoices, purchase orders, receiving reports often lead to matching errors. These matching errors are often the primary causes of incorrect payments, missed payments, and duplicate problems.
Also these errors cascade and trigger more AP problems that may be difficult to track. These matching errors again require manual investigations that can cost loads of time, money in addition to causing payment delays. If your business is encountering matching errors more often than not, automating the matching process with OCR and ICR technologies is the best practice to eliminate them.
Disappearing Invoices: While invoice processing can go experience several errors, there is usually a case when the invoice processing doesn’t even start when the invoices get misplaced or disappear in thin air.
A business that receives an invoice from multiple sources in multiple formats is the most vulnerable to these errors. Even businesses with a fast-paced accounting environment, high volume invoices, manual or disorganized suffer these problems too. The best way to mitigate this problem is to adopt e-invoicing to bring all the invoices onto a single platform and eliminate the missing aspect.
Double Payments: Double payments is one of the side effects of misplaced or disappeared invoices. When the AP workflow is disorganized invoices do not often reach the team or get misplaced and vendors may send multiple invoices to ensure payments. An overburdened AP team may process payments for multiple copies of invoices resulting in double payments. Having e-invoicing, conducting regular audits using tools available can cut down on these double payments.
How Outsourced Bookkeeping can help?
Every aspect of the Accounts Payable process is vital for seamless and accurate invoice and payment processing. Any error of any scale in the AP process can trigger a sequence of events that may result in revenue loss at best or financial fraud at worst.
Yet many businesses often encounter swathes of errors in their AP process and suffer setbacks in their invoice processing. This may be a result of a lack of an organized and seamless AP process or a shortage of AP resources that can process high volume invoices and thrive in a fast-paced accounting environment – Outsourced Bookkeeping can help both cases.
As one of the best back-office accounting firms in the business, Outsourced Bookkeeping is equipped with a dedicated AP team who specialise in crafting an efficient AP strategy and executing it to perfection. Leveraging our advanced AP automation tools our AP team can also fill the gaps in the AP process to cut down the errors and enhance the efficiency and accuracy of your current AP process. If you are a small and medium business looking to outsource the Accounts Payable process, you can contact us here: https://outsourcedbookeeping.com/