The Accounts Payable landscape is ever-evolving just like your business. With new technology emerging to streamline processes, reduce headcount, and shorten the payables cycle, it’s important you don’t overlook this important part of your business. Without an automated Accounts Payable department, the only way to scale might be to add additional staff. For businesses that haven’t yet adopted a Payables Management System, it can be a daunting task. Without an understanding of the benefits, ROI, and obtaining leadership buy-in, you’ll be stuck in an unscalable situation prone to errors resulting from manual production. These costly errors can be a result of in the form of duplicate payments, fraud, late payments, missed invoices, and lack of visibility to the payable environment in your organization. With a myriad of applications available, one size does not always fit all and often they will require additional tools. Rather than focusing on the benefits, I’d like to highlight some core features you should consider in your Payment Management System.
• Invoice Processing – Look for applications that offer intelligent OCR and artificial intelligence. If your Payment Management System relies on people extracting and keying info, then you’ll have to do a more thorough job of reviewing invoices. The most common error is the invoice number being entered incorrectly which leads to costly duplicate payments.
• Exception Management – Invoice exceptions are documents your Payment Management System was not able to process because it did not meet the invoice submission requirements. This can account for about 20% – 30% of document submissions with each document taking your team between 2-5 minutes to review and take action on. Multiply that over a year and the costs start to add up.
Consider a system that alerts suppliers anytime a submission does not meet requirements, or better yet, a system that rejects the document with details on how to properly resubmit. This will help address the problem at entry versus after it enters your system and your organization now has to dedicate resources.
• Payment Solutions – A Payment Management System would not be complete without a payment solution. Consider a system that can offer multiple payment methods such as checks, ACH, virtual credit cards and rush payments. For those that want more control, look for a system with payment approval workflows. This provides a final opportunity to review and release payments.
An entire article can be written on this topic alone but some key benefits to outsourcing your payments include:
- Your Payment Management System provider manages outstanding payments by reaching out to suppliers.
- Your Payment Management System provider manages the preferred payment method so there’s no payment “exception” list for your team to manage.
- Significant cost reduction as processing manual payments is labor-intensive and time-consuming. No more manual printing, reviewing, tearing stubs, stuffing, and mailing checks.
- In the event of fraud, your organization’s bank account is not compromised. Depending on your Payment Management System provider, funds to pay your suppliers are transfers from your organization’s account to theirs, and in turn, they pay your supplier. Your Payment Management System provider manages their own Positive Pay and if fraud occurs, it will be their bank that is compromised.
