common accounts payable problems
AI and ML, Digital Workers / February, 24 2023

9 Common Accounts Payable problems and their solutions

For any organization, especially the large ones, there is no dearth of accounts payable work. The AP (Accounts Payable) work is critical in any organization as it directly deals with and impacts the company’s cash flow and financial stability. Since it deals with various processes involving receiving invoices, verification, processing payments, and more, managing efficiently can help sustain both a positive cash flow and robust vendor relationships. Vendor relationship is also an important aspect that we tend to overlook until there is an urgency, or we need some price consideration; it is where the organization’s reputation and good standing make the difference.

However, AP management is a complex process as they face several obstacles in their course of execution. The obstacles can affect the entire business and impair the supplier relationship, resulting in severe repercussions. For instance, you receive an invoice despite no matching purchase order. Or when you get an invoice notice late, and the team does not remember the original request for payment. There can be several such instances, and effectively tackling them is necessary for the smooth execution of the business. Of course, undertaking these complications can be daunting. Nonetheless, moving from manual processing to embracing technology, automating tasks, to utilizing Artificial Intelligence, have all augmented the flourishing of the complete AP cycle with much fewer hiccups. Let us delve into the common accounts payable problems and the solutions which you can leverage to address them.

9 most common accounts payable problems/ areas of improvement:

Let us look at the problems the accounts payable team usually face, especially when the department is quite large, and they handle huge volumes. Few are an outcome of inadequately defined processes, some are out of human error, while others can arise from technical breakdowns. No matter the problem, they all impact the AP department and, consequently, the business adversely.

Slow processing

If the AP team relies on manually processing entirely or even partially, the average invoice is passed around to many hands before the AP team approves its payment. Not only this slows down the entire processing time, what is more, is that it increases the risk of making an error or losing a document. Thus, apart from slow processing, it results in late invoices and distressed vendors who intermittently enquire about the payment status. It is not the ideal relationship. 

According to the Efficiency Benchmarks report from IOFM, the average on-time payment rate is:

  • 24% for companies with low volume of invoices, when processed manually.
  • 25% for companies with moderate invoice volumes, when processed manually.

Apparently, invoice processing takes time, even for a single invoice. Some organizations may endure this slowness, accepting it as a part of their world. Other companies may have over-complicated approval systems or may not have a well-defined process to resolve invoice exceptions.

Matching Errors

Matching the purchase orders, invoices, and receipt reports ensure that the enterprise receives the products they pay for at the agreed amount. This three-way matching is a resourceful AP practice but can also be quite a hassle when taken manually. 

You launch a manual investigation when you find discrepancies between PO, invoices, and receipt reports. However, with the workforce crunch and shortage of time, do the employees really have the time to execute detailed multistep investigations for every mismatch? Similar to other manual processes, matching errors cause quite the delay slowing down the efficiency of the AP team.

Exceptions in invoices

We can expect the suppliers to send accurate invoices every time. However, even the suppliers are susceptible to mistakes that can arise from errors and inefficiencies. When exception invoices arise, which may be because of incorrect or incomplete data, it again takes the AP team to follow up and find out the next step manually. Manual intervention, reaching out to the supplier, fixing the invoice, and processing take time and also slows down the department.

Unauthorized purchases

 At times, some employees may sidestep the usual purchasing process to avoid the hassle of going through a slow and stern AP department. They might also have urgent business requirements and resort to a non-authorized supplier. Such invoices are, again exceptions from the enterprise end, and processing these can take a reasonable amount of time, cascading the slowing down of other invoices in the process.

High volumes of invoices

Often AP teams are overwhelmed by massive volumes of invoices, which invariably lead to delays in processing and payment. This impacts the cash flow and creates cash management challenges.

Risk of fraud- both internal and external

The risk of fraud keeps troubling the Accounts Payable team. According to a survey, B2B payment fraud increased by 10% during the Covid-19 pandemic. External fraud takes place in several ways, from email scams to impersonation frauds, log-in breaches and many more. Furthermore, AP employees can also corrupt, misdirect frauds, or make unauthorized purchases. Detecting AP fraud is not very easy for an honest AP member or other departments of a company.

Compliance risks

When it comes to AP team, they have to do their operations, ensuring compliance with various regulations. That can be complex and time-consuming and can also impact their ability to process invoices and disburse payments promptly. That, too, creates additional compliance risks.

Payment errors – double payment, misplaced invoice, payment before delivery

Errors such as the team generating double invoices, a typo in a PO, or even human error to mark an invoice as paid can result in double payments. 

Again, there can be the case of a disappearing invoice, where nobody from the AP team processed the invoice and further misplaces or loses the invoice. When the AP team discovers it, it complicates the records and results in hefty late fees.

Errors such as paying the supplier as soon as the invoice arrives, without even receiving the goods/services, can also lead to other complications. On top of that, if the shipment is damaged or has missing items, it might be challenging to follow up and ultimately slow down the department.

Reconciliations and audit-readiness

Reconciling the accounting records in the ERP system with other financial data is a significant task that the AP team usually dreads. On top of that, any discrepancies, missing invoices, etc, can further add to the woes. 

Possible Solutions to tackle these common accounts payable problems.

Do you want to resolve all these challenges that make the Accounts Payable operations cumbersome, prone to errors, and result in payment delays? Implementing automation tools can relieve many of the issues that we discussed here. However, since automation does not reflect human performance and cognition, there are other challenges that you may have to deal with. Robotic Process Automation (RPA) and Optical Character Recognition (OCR) can handle simple process automation and can recognize text. Still, for effective implementation, you may need additional software, develop custom workflows, and integrate them. Here comes the Digital Co-worker, an AI-powered software that can handle end-to-end Accounts Payable operations. Let us explore its potential benefits.

What about Digital Co-worker?

With the comprehensive abilities of Azure Cognitive services and Power Platform, a digital co-worker is trained with complete domain knowledge to manage the accounts payable process. Not only a digital co-worker can automate processes as instructed by humans with complete accuracy and reliability, but it can also sync with all the activities within the accounting and finance department and skyrocket the productivity of the accounts payable team.

Saxon’s latest offering of Digital Clerx has Emma – the accounts payable specialist. Emma is an exquisite blend of AI (Artificial Intelligence), cognitive automation, Machine Learning, RPA, and Analytics and is also capable of learning new things. Human-in-the-loop ability allows Emma to escalate new challenges to humans and learn. All the common accounts payable problems that we discussed here can be tackled seamlessly by Emma. Not just that, you can scale up and down our Digital Clerx offering as per your requirement. 

You can schedule a free trial and hire Emma as an extension of your existing team. With all platform licensing costs covered and complete domain knowledge, you will be surprised to find visible ROI (Return on Investment) from day one itself.

Get in Touch

Newsletter

Stay up-to-date with our latest news, updates, and promotions by subscribing to our newsletter.

Copyright © 2008-2023 Saxon. All rights reserved | Privacy Policy

Address: 1320 Greenway Drive Suite # 660, Irving, TX 75038

Archana Aila

Archana Aila

Position Here

With 2 years of hands-on experience in Power Platform, I’ve excelled in developing and implementing solutions for businesses, harnessing the power of Power Apps, Power Automate, Power BI, and Power Virtual Agents to streamline processes and enhance productivity. My proficiency extends to crafting custom applications, automating workflows, generating data insights, and creating chatbots to aid operational efficiency and data-driven decision-making.

With an intermediate knowledge in Azure cognitive services, incorporating them into Power Platform use cases to innovate and solve complex challenges. My expertise in client engagement and requirements gathering, coupled with effective team coordination, ensures on-time, high-quality project deliveries. These efforts have yielded significant accomplishments, solidifying my role as a valuable asset in this field.

Akash Jakkidi

Akash Jakkidi

Position Here

I am committed to resolving complicated business difficulties into simplified, user-friendly solutions, and I have extensive experience in Power Apps development. I thrive in integrating cutting-edge technology to optimise process efficiency, leveraging intermediate knowledge in Azure, Cognitive Services, and Power BI. My interest is developing dynamic apps within the Power Apps ecosystem to help organisations achieve operational excellence and data-driven insights.

As a tech enthusiast, my passion for innovation leads me to constantly explore new ideas and push the frontiers of what is possible, assuring significant contributions to our technological world.

Palak Intodia

Palak Intodia

Position Here

I am a tech graduate with a strong passion for technology and innovation. With three years of experience in the IT industry, I’ve been on a continuous journey of professional growth and skill development. My expertise lies in Power Apps and Automate, where I’ve had the privilege of contributing to multiple successful projects.

I’m dedicated to delivering results that not only meet expectations but also drive the success of the projects I’m involved in. I’m committed to my ongoing professional development and the pursuit of excellence.

Roshan

Roshan Jaiswal

Position Here

With nearly 2 years of dedicated experience in Power Platform technology, my expertise lies in crafting customized business solutions using Power Apps and Power Automate. I excel in identifying intricate business requirements and translating them into innovative, user-friendly applications. My daily tasks involve meticulously deploying applications across diverse environments and harnessing the full potential of the Microsoft ecosystem within business applications.

I have proven my adaptability by consistently meeting the demands of creating responsive and scalable applications. Also seamlessly integrating complex workflows and data sources, ultimately enhancing operational efficiency and driving sustainable business growth.

Sugandha

Sugandha Chawla

Position Here

Sugandha is a seasoned technocrat and a full stack developer, manager, and lead. Having 8 years of industry experience, she has been able to build excellent working relationships with all her customers, successfully establishing repeat business, from almost all of them. She has worked with renowned giants like Infosys, Ernst & Young, Mindtree and Tech Mahindra.

She has very diverse and enriching work experience, having worked extensively on Microsoft Power Platform, .NET, Angular, Azure, Office 365, SQL. Her distinctiveness lies in the profound domain knowledge, managerial skills, and process mastery, that she additionally holds, as a result of possessing a customer facing role, working with different sectors, and managing and driving numerous critical executions, single-handedly, end to end.

Vibhuti Dandhich

Vibhuti Dadhich

Position Here

Vibhuti, a Power Platform technology evangelist, has passionately embraced the transformative potential of low-code development. With a background that includes experience at EY and Wipro, she’s been a trusted advisor for clients seeking innovative solutions. Her expertise in unraveling complex business challenges and crafting tailored solutions has propelled organizations to new heights.

Vibhuti’s commitment to staying at the forefront of technological advancements and her forward-thinking approach have solidified her as an industry thought leader. Her mission is to empower businesses to thrive in the digital age, revolutionizing operations through the Power Platform.

Ruturaj Kulkarni

Ruturaj Kulkarni

Position Here

With 8 years of dedicated expertise in the IT realm, I am a seasoned professional specializing in .NET technologies and Microsoft Azure Cloud. My journey encompasses a profound understanding of software development using the .NET framework and a robust command over Azure’s cloud ecosystem. Throughout my career, I’ve demonstrated a knack for crafting scalable and efficient solutions, leveraging the power of cloud computing.

My passion lies in staying at the forefront of technological advancements, ensuring that my skills align seamlessly with the dynamic landscape of IT. Ready to tackle challenges and drive innovation, I bring a wealth of experience to any project or team.

Sija Kuttan

Sija Kuttan

Vice President - Sales

Sija.V. K is a distinguished sales leader with a remarkable journey that spans over 15 years across diverse industries. Her expertise is a fusion of capital expenditure (CAPEX) machinery sales and the intricacies of cybersecurity.

Currently serving as the Vice President of Sales at Saxon AI, Sija adeptly navigates market dynamics, client acquisition, and channel management. Her distinguished track record of nurturing strong relationships, leading diverse teams, and driving growth underscores her as an adaptable and seasoned sales professional.

Gopi Kandukuri

Gopi Kandukuri

Chief Executive Officer

Gopi is the President and CEO of Saxon Inc since its inception and is responsible for the overall leadership, strategy, and management of the Company. As a true visionary, Gopi is quick to spot the next-generation technology trends and navigate the organization to build centers of excellence.

As a digital leader responsible for driving company growth and ROI, he believes in a business strategy built upon continuous innovation, investment in core capabilities, and a unique partner ecosystem. Gopi has served as founding member and 2018 President of ITServe, a non-profit organization of all mid-sized IT Services organization in US.

Vineesha Karri

Vineesha Karri

Associate Director - Marketing

Meet Vineesha Karri, the driving force behind our marketing endeavors. With over 12+ years of experience and a robust background in the B2B landscape across the US, EMEA, and APAC regions, she is pivotal in setting up high-performance marketing teams that drive business growth through a transformation based on new-age marketing practice.

Beyond her extensive experience driving business success across Digital, Data, AI, and Automation technologies, Vineesha’s diverse skill set shines as she collaborates with varied stakeholders across hierarchies, cultivating a harmonious and results-driven workspace.

Sridevi Edupuganti

Sridevi Edupuganti

Vice President – Cloud Solutions

Sridevi Edupuganti is an innovative leader known for strategically enhancing business opportunities through technology planning, orchestrating roadmaps, and guiding technology architecture choices. With a rich career spanning over two decades as a Senior Business and Technology Executive, she has driven teams to empower customers for digital transformation.

Her leadership fosters democratized digital experiences across enterprises. She has successfully expanded service portfolios globally, including major roles at Microsoft, NTT Data, Tech Mahindra. Proficient in diverse database technologies and Cloud platforms (AWS, Azure), she excels in operational excellence. Beyond her professional achievements, Sridevi also serves as a Health & Wellness coach, impacting IT professionals positively through engaging sessions.

Joel Jolly

Joel Jolly

Vice President – Technology

Joel has over 18 years of diverse global experience and multiple leadership assignments across Big 4 consulting, IT services and product engineering. He has distinguished himself by providing strategic vision and leadership for solving common industry problems on cutting-edge technologies.

As a leader surfacing and operationalizing next-generation ideas, he was responsible for exploring new technology directions, articulating a long-term technical vision, developing effective engineering processes, partnering with key stakeholders to build a strong internal and external brand and recruiting, mentoring, and growing great talent.

Haricharan Mylaraiah

Haricharan Mylaraiah

Senior Vice President - Strategy, Offerings & Sales Enablement

Hari is a Digital Marketer and Digital transformation specialist. He is adept at cultivating strong executive and customer relationships, utilizing data across all interactions (customers, employees, services, products) to lead cross-functionally as a strategic thought partner to install discipline, process, and methodology into a scalable company-wide customer-centric model.

He has 18+ years experience in Customer Acquisition, Product Strategy, Sales & Pre-Sales Management, Customer Success, Operations Management He is a Mechanical Engineering Graduate with MBA in International Business and Information Technology.