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AP Manager Problems and How to Solve Them

June 20, 2018
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The roles and responsibilities of the AP manager are constantly changing. As businesses set more ambitious goals, every second of the workday counts. AP managers tend to have one objective in mind—to pay vendors as quickly and safely as possible—but their manual, paper-based tasks get in the way of achieving that goal.

AP managers spend endless hours handling accounts payable duties, including invoice approvals, payment cycles, and paper-based processes. In the midst of the payable pandemonium, obstacles pop up and processes come to a screeching halt. To save the day, here are some simple solutions to the top five problems your AP manager faces.

Managing Difficult Invoice Approval Workflows

It’s nearly impossible for an AP manager to handle manual approval processes perfectly. Between invoice entry, routing, and payments, it’s easy to overlook something that increases risk. Approvers stay busy with their own responsibilities. And the outdated invoice approval workflow hinders the AP manager from paying vendors on time.

When pushing an invoice through an approvals process, there are two common bottlenecks. First, there could be an issue with the invoice or service billed for. Service may be incomplete or the amount incorrect. Another delay could be the approver and their lack of time to adequately review an invoice on time.

Either way, the AP manager wastes time following up with approvers to keep an invoice moving through the payment cycle. PayStream Advisors reports 25% of businesses blame manual approval routing of invoices as the pain of accounts payable duties. Then there’s the added frustration of an invoice being sent to other departments rather than to the AP manager first.

Try some of these tips to help AP managers ease the approval pains:

  • Request that all invoices are sent to one email inbox for the AP manager to administer. Receiving invoices via email cuts down on printed invoices and keeps them all in one place before designating an approval workflow.
  • Grant access for more than one colleague to approve an invoice. If a director is out of office and unable to approve, it’s helpful to have someone else able to do so. Give permission to someone in your department to approve an invoice in their absence. Setting up these workflow permissions ahead of time keeps the invoice moving without delay.
  • Schedule time to approve invoices each week and let your AP manager know your schedule. If an AP manager can expect an invoice to be paid on a certain day, it eases the stress and guessing of when the invoice will be approved.
  • If there’s a dispute with the invoice, alert the AP manager immediately. This prevents the invoice from being pushed through a workflow and paid without proper approvals.

Paying Vendors Past the Due Date

Of all accounts payable pains, the biggest one AP managers try to avoid is late vendor payments. More likely than not, payments are late due to lengthy, paper-based processes. The reason being is approvals could take longer than predicted, or even worse, there could be an invoice error that’s not caught until later in the payment process—if ever.

Late fees are an unnecessary expense. According to PayStream Advisors, AP managers with paper-based accounts payable duties encounter late payments and missed discounts for a few reasons.

The 2018 Payables Insight Report says the issue is with invoicing—long approval cycles (47 percent), missing information (42 percent), lost invoice files (35 percent), manual routing (29 percent), and decentralized invoice receipt (25 percent). Unfortunately, these pitfalls account for the majority of an AP manager’s struggle to pay on time.

As a solution, SMBs are leaning on eInvoicing to solve these problems. Invoice applications are automatically coded and assigned to an approval workflow, then electronically routed for approval in one portal. There’s less worry about misplaced printed invoices or filling in the blanks. With eInvoicing, the approvals cycle is mostly paperless and controlled. An AP manager can electronically route invoices and schedule automated approval reminders to groups or individuals.

Most middle-market companies also suffer from late payments and related fees due to juggling the numerous vendor payment types and information.

Unfortunately, almost half (48 percent) of these businesses still pay vendors via check which costs much more than ePayments. It costs anywhere from $4-$20 to process a single paper check, not to mention the decreased productivity.

AP automation allows AP managers to use batch processing to approve dozens of payments at once. And even better, solution services such as the AvidPay Network work closely with your vendors to determine their preferred payment method—even checks. These time-saving perks allow time to analyze records and reports without worrying about fixing errors or chasing down approvers to avoid late payments.

Processing More Paper with Fewer People

In a paper-based accounts payable world, AP managers manually enter each vendor’s information and payment details into an accounting system, in addition to searching through filing cabinets to respond to vendors, manage approvals, or handle the general ledger.

Most SMBs have one AP manager who processes the piles of paper daily. More paper and fewer people can lead to many costly problems, including invoice entry errors, late fees, fraud attempts, and poor vendor relationships.

Of all the paper-based risks, one of the biggest danger AP managers face is fraud attempts. Yes, most companies have internal fraud protection software or processes, but paper-based accounts payable duties make it easy to miss small details. With paper-based processes, fraudsters pose as trusted vendors and mail fake invoices. At first glance, the invoice seems real. When quickly processing piles of paper, it’s easy not to notice small details like headers and contact information.

Here are a few overlooked best practices AP managers can implement immediately to reduce the risk of paper-based fraud.

  • Keep a clean master vendor file of active vendors and archive the rest. When processing piles of paper, if a vendor has not been properly screened, and the list is filled with old vendors, it’s likely a bogus vendor will slip through the process, especially if an invoiced service seems legitimate.
  • Store blank checks locked away with limited access. If blank documents are easily accessible, fraud could be right under your department’s nose. Controlling access limits the risk of anyone writing a bad check on the company’s behalf.
  • Have a clear view of the payment pipeline. A recent Journal of Accountancy article recognizes clear payment disbursement manages cash flow and reduces the chances of unapproved payments or errors going unnoticed.
  • Digitize as much of the entry process as possible. Eliminating paper reduces the risk of lost files, missing details, and fraudulent files. Centralized, controlled, cloud-based solutions safely store all invoices and payment data electronically. Automated AP solutions include fraud protection for ePayments and printed checks.

Solving the AP Manager “Data-Driven Decision Dilemma”

Along with the many other payment tasks, the AP manager is also responsible for keeping track of all the payment data. Storing all printed payment data in file cabinets only hinders auditing and vendor inquiries.

When data and reports are hidden in storage cabinets and Excel spreadsheets, significant financial risks and opportunities can easily be overlooked.

AP automation stores  historical payment, invoice, and vendor data automatically. Most solutions even support customized reports to track and recall data to support your leader’s decisions. With automation, your AP manager can track new metrics that support inefficient spend. Deloitte’s recent accounts payable report shared a few KPIs to measure success and improve processes with supporting data.

Start by allowing your AP manager to be the gatekeeper of accounts payable data. Add other team members to be the second set of eyes.

“Assign responsibility for data to a central master data team that can check for completeness, accuracy, and compliance with standard terms. This team should also periodically review vendor performance to ensure vendors continue to meet their contractual terms.”

Other recommendations to effectively use data include periodic vendor contract reviews, checking for overpayment, and comparing industry standards. When your AP manager has more time to analyze data, your finance department will uncover fraud risks, billing errors, or opportunities to improve accounts payable duties and vendor selection.

Facing the Fear of AP Automation

AP automation sounds like the perfect solution to the AP manager’s problems, but the reality can be quite scary. The AP manager’s biggest fear of AP automation is being left jobless because their everyday accounts payable duties will be automated. But the role of a manager isn’t dying—it’s evolving.

Tech-first companies automate the AP manager’s routine tasks to save money, time and scale for growth. Instead of punching numbers and clicking, AP automation provides a more accessible and efficient accounts payable process by streamlining the invoice workflow from start to finish without additional manual steps. But businesses still keep control of the payment cycle by setting up workflows to mimic current accounts payable duties and visibility into each step. For example, AvidXchange works closely with AP managers to quickly set up current approval processes.

So where does AP automation leave the AP manager? With plenty to do—analyzing big data to support leaders’ financial decisions and perfecting strategies, for starters. An AP manager at a medium enterprise real estate company shares the benefits:

“AvidXchange has significantly reduced processing paper invoices. It allows our managers to process bills quickly and spend more time managing their communities!”

Other users appreciate easier annual audits due to electronic invoice storage. The big benefit most AP managers experience is reduced paper and processing time. With electronic access, there’s improved visibility into invoices, approvals, and payment data. AP automation allows an AP manager to work smarter, not harder to process payments and make strategic decisions.

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