Here’s What a Broken AP Process Costs Your Business – and the Fastest Way To Fix It

Managing accounts payable is more than an administrative burden. Broken AP processes can result in damaged supplier relationships, missed discounts, and strategic blindness, all of which can significantly impact profitability and long-term growth.  

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In this article, we'll help you understand what broken AP processes are really costing you. We'll explore the benefits of accounts payable automation and provide a clear roadmap for transforming your AP process into a strategic asset that fuels sustainable growth.

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Warning Signs Your AP Process Needs Fixing

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These critical warning signs may indicate that your accounts payable cycle is quietly sabotaging your business:

• Invoice processing delays: When your AP team takes weeks rather than days to move from invoice receipt to final payment, you're losing valuable time and resources.

• Payment errors: Frequent duplicate payments, incorrect amounts, or payments to the wrong vendors indicate broken manual intervention points in your accounts payable process.

• Financial blindspots: Limited visibility into what your business owes, payment status, or upcoming liabilities compromises accurate cash flow forecasting and your company's financial statements.

• Supplier relationship strain: When vendors regularly call your accounts payable department about delayed payments or missing remittances, your manual accounts payable process is damaging crucial business partnerships.

• Missed savings opportunities: The inability to capture early payment discounts or strategically time payments shows that you lack the proper AP tools.

• Missing documents: If your AP staff struggles with missing purchase orders, lost invoices, or incomplete supplier invoices, your AP system is undermining your procure-to-pay process.

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Are your accounts payable processes hurting your business? Streamline your accounting operations with ExpenseOnDemand’s AP automation.

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The True Cost of a Broken Accounts Payable Process

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Direct Costs of Inefficient Invoice Processing

The direct costs of a broken AP system can add up quickly. In most cases, UK businesses are legally allowed to charge 8% interest plus the Bank of England base rate for late invoice payments. These late payment penalties can add a significant amount to invoice totals.  

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Suppliers often offer a 2% discount if buyers pay the invoice amount in 10 days. Failure to take advantage of these early payment discounts also represents missed profit opportunities.

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Duplicate payments also create cash flow disruptions. Without AP automation, accounts payable staff can also spend significant time on manual tasks like data entry. This increases labour costs and takes employees away from more critical tasks like strategic financial management.

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Indirect Costs of Poor Accounts Payable Management

The indirect costs are equally damaging. Delayed payments erode vendor relationships, potentially leading to stricter payment terms, lower service priority, or even supply disruptions. Poor AP processes also compromised cash flow management, making accurate cash flow forecasting impossible.

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Accounting records and financial statements also suffer from timing discrepancies, affecting balance sheet accuracy. In addition, without timely, accurate payable data, important decisions are made based on incomplete financial information. Manual processes can also complicate audit trails, leading to costly regulatory issues or fines.

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How to Fix a Broken Accounts Payable Process

To improve your accounts payable process, start by implementing digital invoice capture technology that automatically extracts data from incoming invoices.  

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This allows invoice information to be directly entered into a centralised system that verifies details against purchase orders and receiving documents, immediately eliminating the most error-prone aspect of AP processing.

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Next, establish automated approval workflows that route invoices to specific employees based on predefined rules (amount thresholds, departments, etc). Approvers receive instant notifications and can review, approve, or flag exceptions from any device. Approval workflows can significantly reduce your AP team's workload, allowing them to focus only on invoices that require special attention.

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Configure your AP automation system to schedule payments according to optimal terms, strategically balancing early payment discount opportunities with your cash flow needs. Ensure seamless integration with your existing accounting systems, so that each transaction can be automatically and accurately recorded (without duplicate entries).

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The final step? Fixing your AP process by implementing reporting and analysis tools. These tools can provide real-time visibility into invoice processing, payment timing, and spending patterns, enabling business leaders to make data-driven decisions.

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The Benefits of Accounts Payable Automation

An optimised accounts payable process delivers multifaceted returns across your organisation. Some of the most common benefits of AP automation include:

• Reduces manual data entry: Automated invoicing tools automatically extract and digitise invoice information, freeing staff from tedious keying and allowing focus on higher-value tasks.

• Decreases payment errors: Advanced AI scanning technology meticulously verifies that payment amounts, account details, and timelines precisely match invoice data, virtually eliminating costly mistakes.

• Strengthens vendor relationships: Consistent, on-time payments facilitated by automation build trust with suppliers, potentially leading to preferential treatment, better terms, and stronger partnerships.

• Creates predictable payment processes: AP automation ensures all payments are properly scheduled, executed, and tracked in real-time, dramatically improving the accuracy of cash flow forecasting.

• Enhances financial health: By streamlining AP operations, companies reduce processing costs, capture early payment discounts, and gain strategic insights that positively impact their bottom line.

• Reduces fraud risk: Multi-level approval workflows allow AP teams to easily flag suspicious patterns, mitigating internal and external fraud.

• Generates comprehensive audit trails: ExpenseOnDemand's AP audit software continuously scans incoming invoice data in real-time, detecting duplicate payments and automatically building clear, detailed audit trails.

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Automate Accounts Payable with ExpenseOnDemand

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ExpenseOnDemand can help you transform your AP process with minimal disruption to your existing operations. ExpenseOnDemand also makes enterprise-level automation accessible regardless of company size. With our modular pricing model, you can choose from over 200 functions and pay only for what you need.  

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ExpenseOnDemand leverages AI-powered technology for invoice capture and validation. Our platform seamlessly integrates with popular accounting software including Xero, QuickBooks, and Sage, ensuring financial data remains synchronised without creating new data silos or reconciliation challenges. Businesses implementing ExpenseOnDemand consistently report results such as:

• Reduction of invoice processing time by 80%

• Real-time visibility into cash flow, payments, and approvals

• Elimination of invoice errors, late payments, and other inefficiencies

• Increased ability to capture early payment discounts

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The efficient accounts payable process facilitated by ExpenseOnDemand also ensures timely payments that strengthen vendor relationships. At the same time, ExpenseOnDemand provides AP departments with powerful tools to monitor the full cycle accounts payable workflow.  

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With ExpenseOnDemand, you can transform your full-cycle accounts payable process from an added cost into a strategic asset.

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Book a demo with ExpenseOnDemand and see how AP automation can reduce costs for your business.

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