Top 5 Accounts Payable Challenges & Solutions

Wanting an efficient accounts payable process and having an efficient accounts payable process are two very different things, especially if common challenges are left unaddressed. Processing errors, approval delays, visibility issues, fraud risks, and high costs are all hurdles every business faces.

Fortunately, with accounts payable automation — and we’re talking full, end-to-end, hands-off automation, all of those problems can be solved. With the most up-to-date technologies like artificial intelligence (AI), your business can finally achieve a successful transition to an efficient, touch-free, automated AP process.

In this article, we’ll break down how automated systems can help you overcome the most common roadblocks to an efficient AP process.

Challenge 1: Manual Data Entry & Processing Errors

When looking at common challenges faced by AP staff, manual data entry and the processing errors that accompany it are inevitably going to be high on the list. In fact, a recent Institute of Financial Operations and Leadership (IFOL) study revealed that 58% of AP leaders are focusing on reducing the number of manual interventions in their AP processes, suggesting that it’s currently a major issue.

Solution

If you thought the solution was going to be optical character recognition (OCR) technology, you’re not alone. OCR is very well known, but it’s also not enough on its own to truly automate invoice processing.

Years ago, it was a great standalone tool for the specific purpose of extracting machine and handwritten text from documents and images before converting that information into easy-to-use data. However, OCR has no way to determine if what it’s capturing is actually accurate.

That’s where AI-driven technologies come in. By integrating AI and its subset technologies — such as computer vision, accurate and efficient top-to-bottom automation becomes an actual possibility. Where OCR alone could only extract text, computer vision uses its AI capabilities to read and interpret visual data. This means the multi-step process of scanning documents and images and then running them through AI-powered systems is cut into one single, efficient process that requires no manual work on your end and significantly reduces errors.

Challenge 2: Invoice Approval Delays

Bottlenecks in the invoice approval process, such as errors, missing invoices, and email-based routing, lead to costly delays. By leaving these issues unaddressed, those costly delays are certain to pile up, resulting in strained vendor relationships, late fees, damaged reputations, and even missed early payment discounts.

Solution

When it comes to solving invoice approval delays that create bottlenecks and impact vendor relationships, streamlining workflows and ensuring proactive notifications can go a long way. In fact, 74% of businesses report higher vendor satisfaction, and 93% report a more accurate, efficient, and streamlined process as a result of full AP automation.

Streamlining workflows with a fully automated AP process is the main solution for mitigating delays. Invoices requiring review are all digitally routed and delivered where they need to be based on your organization’s set parameters. That means no more lost, misplaced, or forgotten invoices. It also ensures no more email invoice approval routing, which lacks any form of escalation facilitation and often results in overcrowded email inboxes (not to mention a whole host of security risks).

Automated notifications and alerts ensure that approving parties are always kept in the loop when invoices are ready for review and when a deadline is approaching. This helps guarantee that employees are always reminded to complete tasks and that business standard operating procedures, such as escalation rules, are being enforced.

Challenge 3: Lack of Visibility & Control

Beyond workflow and approval challenges, non-automated AP systems can create a lack of visibility and control throughout the AP process. Not only can this lack of insight cause the delays we discussed previously, but slow, manual processes and fragmented data also result in out-of-date or flawed cash flow insights. The impact can echo far outside of the accounts payable department.

Solution

With full AP automation, every document is easily tracked throughout the entire process, meaning managers and AP staff are always aware of invoice statuses. By utilizing real-time dashboards and reporting tools, insights into the whole process become easy to access at any given step.

The benefits of a transparent and efficient AP process go far beyond simple convenience in invoice status tracking. Real-time, AI-powered analytics can provide powerful cash flow information, which, in turn, can empower better decision-making across departments and initiatives. In a recent study of business executives, 73% reported that full AP automation contributed to improvements in cash flow, increased savings, or business growth. By integrating automation and AI technologies, financial decisions can be made based on your organization’s most accurate and current data.

Challenge 4: Fraud Risks

Fraud is one of the top concerns when it comes to risk management teams. It becomes extra challenging when operating with a sub-optimal AP process.

Fraud is becoming especially pervasive, with over 80% of organizations reporting being targets or victims of payment fraud attacks. One of the most prevalent issues is fraudulent vendors or employees setting up fake supplier accounts and submitting fake invoices, leading to unauthorized payments. Such schemes can go undetected if AP departments do not have strong validation and approval processes in place.

Solution

A key piece in solving omnipresent fraud issues is the deployment of AI-driven systems that automatically enforce compliance checks and flag suspicious activities.

AI-driven technologies are a progressively useful tool when it comes to combating potential fraud. Reports have found that machine learning-based systems can improve fraud detection accuracy by 90% and reach an overall detection rate of 95%. Machine learning is a particularly helpful subset of AI when it comes to fraud prevention, as it is trained to analyze data and identify patterns, which then allows it to make better predictions. By using trained algorithms, AI-powered technologies are able to effectively help when inspecting invoices for fakes, duplicates, and unusual vendor behavior.

Challenge 5: High Processing Costs

The AP process is a necessary cost of doing business. However, between the initial labor and the additional error-correcting that inevitably comes with manual processing, traditional AP processes result in higher-than-necessary expenses. Beyond the direct labor costs, organizational inefficiencies and increased operational expenses are often symptoms of manual processing.

Solution

On top of solving a number of common AP challenges, automated AP processes also cost three times less than manual ones. Because AP automation is faster and more accurate than classic manual processes, it enables businesses to cut costs associated with previously labor-intensive and repetitive tasks. In fact, a recent study by PYMNTS Intelligence found that 44% of organizations expect their AP automation efforts to drive cost savings and improved cash flow by 2026.

In addition to reducing labor expenses, full AI-powered AP automation enables businesses to optimize workflows and minimize resource usage. By reducing the need for human input, automation frees up employees’ time and energy for more valuable applications, improving operational – and cost – efficiency. Furthermore, automated AP systems have no problems when it comes to workload variability, meaning that even when invoice volumes increase, no additional resources are needed to handle them.

Transforming AP with AI-Driven Solutions

AP professionals have dealt with the struggles of manual AP processing long enough to know the number of challenges that come with it. Human error, delayed approvals, lack of visibility, fraud concerns, and overall high costs are all problems that arise from old-school AP processing. Fortunately, AP automation addresses these and more.

By working with MetaSource, your business can incorporate world-class AP automation solutions to achieve a faster, more efficient AP process. With increased data accuracy, real-time analytics, process transparency, overall cost reduction, and a variety of other benefits, AP automation is a no-brainer for enhancing your organization’s AP workflow.