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Accounts Payable (AP) and expense management are critical business areas which can directly impact cashflow and financial stability, however many underestimate the standing of these functions and the importance of adopting electronic processes with only 9% of accounts payable departments using AP automation across the UK. Within this blog post we look at the hidden risks of neglecting your AP function, and how the implementation of automated AP systems can help you overcome them and drive efficiency within your business.
Financial visibility can make or break a company and is vital for strategic decision making and budgeting, and when you don’t have clear visibility, it can have a ripple effect across your entire organisation. Without a thorough understanding of your expenses, you simply cannot plan and forecast accurately which can result in poor cash flow management and under or over funded areas. By automating your AP payable you can get a real-time insight into your financial visibility and see what is owed, your outgoings and identify any bottlenecks which can impact your financial situation quickly.
Did you know that inaccurate expense tracking can result in non-compliance of financial regulations? It can be complex and time consuming to keep on top of your compliance requirements, but an important task as not meeting your obligations can lead to penalties and increased scrutiny from regulatory bodies. Automating your AP ensures you’re meeting your obligations, without you even needing to think about it – all your invoices and records are stored for the required length of time.
Relying on manual processes or disjointed tools can lead to many inefficiencies such as lengthy practices and mistakes resulting in costly financial inaccuracies. Automation is a guaranteed way to reduce time and errors – in fact, automating accounts payable has been shown to save finance professionals 50% of their time!
Fraudulent activity is a significant hidden risk that can arise from overlooking your AP processes as invoice fraud cost businesses a staggering 1.2 billion in 2022, and invoice fraud rates are continuing to rise. With some realistic tactics being used by fraudsters, busy AP departments can easily miss fraudulent activity which is why intelligent, fraud detection tools in automated AP software are helping businesses to save thousands of pounds.
AP departments are on the frontline with regards to supplier relationship management and are the first to feel the brunt of any grievances from overdue or slow payments. It is estimated that 92% of businesses pay suppliers late, due to slow AP processes, which can be detrimental to building strong relationships, obtaining early payment rates and securing good deals. Automating your AP can shave days off your approval times (an average of 5.5 days in fact!), enabling supplier payments to be made much quicker and building better relationships with vendors.
Often most overlooked are your employees and how well they feel supported with the challenges surrounding AP processes which can be paper heavy, arduous and time consuming. Managing with a lack of technological support such as robust software, or glitchy solutions which aren’t up to the task can affect employee morale, productivity, and a create feeling of being overworked. Equipping your employees with the right tools to help them do their job quicker and easier will do wonders for productivity and feeling of worth to the company.
Implementing accounts payable software can be a daunting task and can require a capital outlay, but the initial costs are far outweighed by eliminating the hidden risks of overlooking your AP processes altogether. Visibility, fraudulent activity, employee morale and company wide inefficiencies can all be overcome by implementing AP automation software and a host of benefits can be seen such as time and cost savings, improved supplier relationships, greater insight for enhanced decision making and many more.
Here at Pegasus our AP Automation Software can be purchased for Opera 3 SQL SE, our flagship ERP solution. For more information or to see it in action, please contact us today.
Posted On: December 07, 2023
