Is your accounts payable (AP) check run holding your business back?
The AP check run remains a pain point for many finance departments who rely on manual processes and outdated solutions to manage AP — in turn, causing check run delays and hiccups. This blog explores the intricacies of the AP check run and actionable tips to fortify your financial processes. From refining invoice approval workflows to embracing the digital shift, each step is a stride toward efficiency and precision.
Key takeaways
- Many finance departments struggle with AP check runs, facing delays and disruptions due to manual processes and outdated solutions.
- AP check runs involve approving and issuing checks for vendor payments, with 36% of companies still making over half of their payments by check.
- AP automation is crucial for modern finance teams to simplify payments and reduce manual steps associated with accounts payable.
What is a check run in accounts payable?
The AP check run involves the approval and issuance of checks for vendor and other stakeholder payments. These payments often include traditional, physical checks, which 36% of companies still use for more than half of their payments.
According to the State of AP Report, digital payments continue to grow in prevalence, with most companies planning to further reduce check usage over the course of the year. However, even though many teams now rely on ACH and virtual cards, most companies need a streamlined process for delivering checks. Today, only 6.5% of companies are not using any checks in their payment process. The other 93.5% of organizations need tools to pay vendors via check when needed.
Traditionally, more payment formats mean more manual work for the AP staff. Modern finance teams need an AP workflow that doesn’t require additional processes when paying vendors in their preferred format. AP automation can be a great tool in simplifying payments while reducing other manual steps often associated with accounts payable.
Why is the AP check run process important?
The AP check run process plays a vital role in maintaining the financial stability of an organization. It not only ensures that vendors are paid promptly, but it helps:
- Avoid late fees
- Maintain good relationships with suppliers
- Monitor cash flow
Neglecting this or not having a good process in place can lead to problems that can have significant consequences for a business. Understanding and prioritizing the AP check run process is essential for any organization’s financial health.
7 tips for improving AP check runs
Inefficiencies and gaps in the AP check run can turn a straightforward process into a headache. However, by honing your internal processes and automating certain AP functions, you can maintain smooth operations and ensure timely payments that support vendor relationships. We outlined 7 steps to improve the accounts payable check run below.
1. Improve the approval process
Invoice approval involves reviewing incoming invoices to ensure their legitimacy and accuracy before making a payment. Manual invoice approvals not only make it difficult for your remote teams to chase down signatures, but they also increase the risk of fraud and human error, like issuing duplicate payments. Leveraging automation in this step can significantly improve accuracy and timelines in approving invoices.
Did you know? An AP automation solution like MineralTree enables teams to set controls and automatically route invoice approvals to the appropriate reviewer, expediting approvals.
2. Focus on internal controls
When it comes to ACH vs. checks vs. digital payments, checks are the most vulnerable payment method. In fact, 63% of organizations experienced fraudulent activity with traditional checks in the past year. With this in mind, consider implementing and maintaining controls like user authentication, human monitoring of cash flow, and meticulous digital recordkeeping.
Did you know? An AP automation solution like MineralTree can help further reduce the risk of fraud through positive pay files. When a business sends a check, a file is sent to the bank with the payment details. If something deviates from the positive pay file, banks know that some sort of fraud was attempted.
3. Refine AP documentation processes
Proper documentation is essential for AP teams because it ensures all financial transactions are accurately recorded and accounted for. Many organizations struggle with outdated and inefficient documentation practices, resulting in costly errors and delays in processing payments.
Refining your AP documentation processes and implementing best practices can help your business:
- Reduce errors
- Decrease processing time
- Improve overall financial management
Even if your business prefers checks over digital payment methods, there are ways to modernize your documentation processes.
Did you know? AP documentation management software like MineralTree can digitize invoices upon capture, boosting efficiency and improving the preservation of digital copies of checks. The digitization of AP documents also reduces paperwork and makes it easy to retrieve checks and documents in real-time.
4. Automate the printing and mailing of checks
Manually printing and mailing checks can be a hassle, eating up valuable time and resources. It also increases the risk of errors and delays in payment processing. Fortunately, automation can streamline and improve this process. Automating the printing and mailing of checks helps businesses:
- Reduce costs
- Increase efficiency
- Eliminate manual errors and delays in payment processing
Did you know? AP automation solutions like MineralTree can automate the entire process, from mail to print. By scheduling payments directly in the system, you save time and reduce the likelihood of errors associated with manual handling.
5. Schedule payments in advance
Traditional check runs often follow a weekly schedule, which doesn’t always accommodate urgent payments or unexpected cash flow needs. Implementing a system to schedule payments in advance can reduce the stress and time spent on manual check processing.
Businesses can reap the following benefits from scheduling payments in advance:
- Better cash flow management
- Improved vendor relationships
- Increased efficiency
Did you know? Platforms like MineralTree allow teams to schedule payments in advance, even for checks. This strategic approach empowers teams to manage functions like days payable outstanding (DPO) more effectively, adjusting payment timings according to your business needs. The feature also enables teams to pay vendors on time, without bumps in the road.
6. Embrace one workflow for electronic payments and checks
Traditional AP processes involve separate workflows for electronic payments and issuing checks. Managing separate workflows for various payment methods introduces unnecessary complexity and leaves more room for error. Advancements in technology make it possible to integrate both processes into one streamlined workflow. Doing so can:
- Reduce errors
- Save time
- Improve overall efficiency
So whether you prefer the speed and security of digital payments or the familiarity of traditional checks, it’s time to leave siloed workflows in the past.
Did you know? With MineralTree, you can leverage a unified workflow for streamlined processes and enhanced efficiency. One workflow enables teams to easily pay vendors in their preferred format, whether that be a virtual card, check, or ACH.
7. Convert check spend to digital spend
Digital payment methods like virtual cards offer various benefits, from streamlined processes to increased visibility throughout the payment process. Moreover, businesses using virtual cards have earned up to $100,000 in rebates, transforming expenses into profits.
However, vendor enrollment isn’t always easy for companies. In fact, 51.6% of survey respondents noted that this process was either their biggest or second biggest obstacle to converting more AP spend into digital payment methods.
Did you know? MineralTree can help enroll your vendors in digital payment methods, saving your team valuable time. Your team can also get in touch with a payment optimization manager who can help prioritize which vendors to contact.
Final thoughts
The importance of efficient check runs for accounts payable cannot be overstated. Without the ability to pay vendors on time and in full, your team and organization risk tarnishing these crucial relationships. But for an efficient AP check run, you need efficiency throughout your entire AP workflow, from invoice capture to payment.
MineralTree can help your team enhance efficiency, reduce fraud risks, and embrace the advantages of both traditional checks and modern digital payment methods.
Ready to make your AP check run a seamless and strategic part of your financial operations? Schedule a demo today.
