Is One Of These 7 Accounts Payable Mistakes Holding Your Business Back?

Accounts payable invoice processing may not be the most exciting task in the world, but it remains an essential one for every organization that wants to pay its vendors.

Without managing your accounts payable (AP) methodology effectively, you can too easily lose value on your team’s effort, mistakenly cost the company literal money, or even damage your professional relationships.

If you are an accounts payable manager or staffer, it’s time for a self-appraisal. Are your existing processes holding your business back, and you don’t even realize it?

Read on for our guide to how to identify if your accounts payable workflow is fully optimized. The following mistakes are things that simply *do not* happen when organizations harness the full power of modern technology to get their work done.


Mistake #1: Failing to close purchase orders after they’ve been paid.

Paid invoice

How embarrassed are you when you accidentally pay the same invoice twice? How easily do you get that money back?

While some double-pay cases occur as a result of a vendor’s duplicate invoicing and the AP team simply flying on autopilot, other times, duplicate payments are often due to purchase orders that were not closed after payments have been made.

When POs are closed immediately upon payment (and hopefully even automatically), double payment mistakes become impossible.

Heaven forbid a vendor should accidentally invoice you *three* times!


Mistake #2: Batch-entering your invoices.


If you find yourself processing lots and lots of invoices in a row, the temptation is of course to process them as a batch. While this certainly has its time-saving benefits, it is not without its drawbacks; there is a reason invoices are best-processed one at a time.

Invoices should be entered into your accounting system individually in order to create a robust audit trail.  Audit trails are, naturally, what will prove most useful during an audit of any sort.

They are the (hopefully highly detailed) logs that reflect activities in an accounting system, prevent fraud, and paint the most precise picture of financial records.

Today’s organizations with well-kept books not only have every detail they need in their financial archive, but they have it in the right order. So, entering invoices orderly is just the right thing to do.


Mistake #3: Not providing any degree of “customer service.”

Customer service

In the sense that your vendors will request information about their receivables, and your own employees might have questions about expense reports or any sort of audit, your accounts payable team has customers.

These are regular interactions, which means they deserve to be engineered towards effortlessness.


Mistake #4: One person does everything.

Work overload

We’re all for wearing multiple hats, but there’s such a thing as taking it too far.

When one person in an accounts payable workflow holds too much responsibility, it leaves the team’s output more prone to error and often contributes to too-long invoice lifecycle times.

Bottlenecks are the enemy of every growing business.

It may only be a few who hold the power as a smaller business develops, but as that happens, it becomes an executive’s most-immediate priority to delegate tasks to the most appropriate workers.

When those tasks can be sent to the right person with the right information at the right time, your tasks are immediately streamlined and more likely to be completed without a hitch.

Is your organization separating duties appropriately? Is it doing so in a way that lets you check against fraud and errors? If no, then you’re heading the wrong way.


Mistake #5: Any part of your accounts payable workflow includes making a paper copy.


The earlier in your process that you make a photocopy, the more you invite problems.

In processing an invoice, payment is the very final thing your AP team ought to do because a lot can change between the initial receipt of an invoice and its proper payment.

For example, credit can kick in and change the amount to be paid, or any other sort of alteration might be required.

This potentially essential change will never trickle down to the right person as quickly as it could or should, and it leaves people hanging.

If you use a copy along the road to successful payment of an invoice, then you leave yourself forever susceptible to a degree of risk that a copy lands where it is paid twice or otherwise prevents the workflow from being executed as optimally as possible.

If you simply must pay from a copy, be sure to match it not only against the original invoice, but against the very final copy that may have been generated along the way.


Mistake #6: Communication breakdown.


Accounts payable teams may often face disconcerted phone calls from suppliers inquiring about the status of their payments, or simply just wanting to know that their invoices were received successfully and scheduled for payment.

These are just the basics; often there are other details that may be required to successfully see an inquiry closed out.

How do you guarantee with maximum certainty that every member of your team are on the same page? Failure to communicate relevant information to your suppliers will contribute to poor supplier relations, and it may even signal a general incompetence. This is only bad news for a growing business.


Mistake #7: Payments are overdue.


There are many different kinds of mistakes an AP team can make, but lots of them end the same way: with payments being made late, or sometimes not at all.

Late payment is a costly mistake.

A supplier may charge a penalty on invoices that are not paid in a timely manner. This means you’re not losing only by paying late fees, but you’re missing out on potential early payment discounts. This of course says nothing of the cost of diminished brand perception when a company takes too long to settle its debts.

Most vendors operate with either net-10, net-15, net-30, or net-60 payment terms, and your organization ought to be able to accommodate any of these in a fully competent way. If you want to change the presented terms ahead of time, then you need only negotiate.

On the other hand, if your situation changes along the way and you find yourself running out of cash and time, getting in touch quickly shows that you’re actively trying to settle your debts.

It demonstrates thoughtfulness, and is only going to be well-received by vendors.


Rounding it up

This collection of mistakes is hardly comprehensive. As there is no limit to mankind’s capacity for screwing up, these seven are but a sample of the missteps your accounts payable team may be making.

As they are common, there are solutions out there, ready and waiting for you to implement.

Workflow automation is perhaps the best one. When a boring process can be made to run as automatically as possible, this means the human is doing only the most essential work.

Automation makes your organization more efficient, and it does so immediately. It makes these mistakes a thing of the past. Your POs will be closed upon payment, you can enter multiple invoices quickly without hurting your audit trail, you can schedule invoices to be pai immediately after they arrive, and you can easily assign tasks to the appropriate member of your AP team and follow up as appropriate.

Pyrus is the workflow automation solution that puts the seven mistakes above to bed once and for all. It moves work forward and streamlines your processes, and it’s free for you to start using today.