Why manual AP processes are holding providers back 

Over the past few years, the business landscape has witnessed a remarkable upsurge in the volume of outgoing payments and incoming invoices across a wide range of industries. This noticeable rise in transaction volume has presented a multitude of challenges for organisations that still rely on manual accounts payable processes. Accounts payable (AP) platforms lacking a payment facility may experience customer attrition as clients opt for providers offering a more comprehensive service package, including payment capabilities. 

The manual AP process is associated with several issues and challenges. A typical manual AP process typically involves;  

1. Receiving invoices from suppliers. 
2. Matching the invoice to a purchase order or receipt.  
3. Once approved, payments are scheduled and processed with a different platform or provider.  
4. Finance teams therefore need to complete reconciliation across multiple platforms. 

This manual AP process can be inefficient due to potential errors and the time-consuming nature of manual data entry and authorisation across multiple platforms.  

Errors and delays 

When businesses rely on a manual accounts payable system that lacks integrated payment capabilities, they face the challenge of using multiple platforms to carry out their payments. This can introduce inefficiencies into their operations because they have to manually transfer data from one platform to another in order to make the payments and reconcile transactions.  

This labour-intensive procedure is prone to errors and can cause delays in financial operations. For example, a business may receive an invoice for stock, details including payment amounts and recipient details then need to be entered manually into a payment processing platform. This is a time-consuming task that requires multiple checks to ensure that data and information is correct. When businesses are expanding, trying to keep up with an increasing number of invoices can be a significant challenge and time burden on the finance team. 

Manually reconciling payments can also lead to human error, resulting in additional expenses, financial setbacks, and complications in supplier relationships. The manual transfer of data can lead to incorrect payment details recorded into payment processing systems causing payments to be rejected or bounce back. The risk of this only gets greater when businesses start expanding and processing an increasing number of payments across multiple locations.   

Cost 

When businesses utilise multiple platforms for managing payments and transactions, they will incur greater costs in two distinct ways. Firstly, using multiple platforms will prolong the reconciliation process, leading to increased labour costs. As mentioned above, using multiple platforms or systems within a manual AP process adds unnecessary time to a business’s payment processing capabilities. 

Secondly, employing multiple platforms in the accounts payable process will result in higher costs in the long run compared to using a single automated system. Whilst an AP platform without payment capabilities may be cheaper upfront than one with a payment solution, the return on investment, in the long run, is lower as businesses will have to look elsewhere for payments processing capabilities. Consequently, businesses will naturally invest in a platform that can meet all their current requirements and support them effectively as the scale. 

Bridging the gap  

The risk for AP providers is that clients are likely to seek solutions that offer the most efficient process, including the ability to make payments and feature ERP integration with accounting software such as Xero, Sage and QuickBooks. These extra capabilities will allow businesses to save time by automatically syncing data and therefore cost in the reconciliation process as well as reduce errors from the manual transfer of data. An integrated solution like this could dramatically improve a client’s AP process and therefore AP platforms without this capability will be less competitive in the market.   

As businesses across the globe experience a rise in the volume of invoices and outgoing payments, this prompts them to seek ways to alleviate these challenges. It is therefore crucial AP providers adapt to this escalating demand and plan ahead.   

If you would like to learn more about how we can help facilitate payments on your platform, our expert team are on hand to talk through your requirements. Reach out to our team here.