The Accounts Payable Challenge

Accounts Payable specialists at most organizations know the pain of manual invoice processing all too well, as almost 80% of all vendor invoice activity is still paper-based*.

AP departments who rely on manual processes find that adding staff does not solve the inherent problem. Manual processes are not only expensive, inefficient and error-prone; they also expose organizations to serious risks that can affect their credit rating and regulatory compliance standing.

AP departments often suffer from paper overload but are too close to the problem to see that there is one. Admitting the problem exists is the first step toward better AP practices.

* Aberdeen Group

Five symptoms of poor Accounts Payable performance

Dissatisfied vendors or AP staff High invoice-processing error rates Missed vendor discounts and late penalties Lengthy reconciliation and payment cycles Inaccurate and lengthy closes

The complexity of Accounts Payable

The Accounts Payable challenge resides in the tedious, manual steps of invoice capture, review, coding, and approval. Below is a brief summary of all the difficulties faced by AP specialists in each step of the process.

		Multi-format and decentralized receipt Collating invoices that come from different suppliers or cost centers in many different layouts and delivery formats — mail, fax, email, EDI, etc.
		Erroneous data capture Errors associated with manual data entry in accounting systems. Labor- intensive processes required to input data further compounded if linked to different costs centers and possibly involving currency conversion.
		Lengthy approval Extended lead times due to manual routing, processing, and sign-off procedures involving individuals in different departments and possibly different countries.
		Costly payment processing Inability to maximize financial benefits associated with payment schedules, such as discounts for early payments or avoiding fees for late payments.
		Inefficient reporting Inability to easily audit invoice processing and payments to match up document flow with the accounting system.
		Disorganized filing Risk of document loss or damage, as documents are received at multiple input points and may be routed or classified incorrectly. High archive costs for compliance and account audits.