Of all the tedious and manual accounts payable tasks, these four are leading the pack.
This article reflects results presented in the 2019 State of Accounts Payable research report.
Accounts payable has been run the same way in middle-market companies for as long as businesses have been paying invoices. Only recently, with the introduction of accounts payable automation, have finance teams been adopting simpler and more efficient processes and increasing productivity by as much as 80%. However, manual processes are still widely practiced across the middle-market, as only 24% of middle-market companies have implemented an automated accounts payable process.
There’s no doubt that manual accounts payable makes day-to-day operations a challenge for finance employees, but in addition, these tedious and manual tasks also hurt their broader company. We’ve surveyed over 1,000 finance professionals of varying seniority levels employed by middle-market businesses across all industries, and these are the four most tedious manual AP tasks that have risen to the surface:
1. Invoice Coding and Data Entry
Manually typing invoice data into an accounting system consumes unnecessary hours and leads to many errors that will create more work downstream in the AP workflow. This process is costly from a financial perspective, as all documents need to be physically stored, secured, and insured. Errors made performing manual data entry require AP managers to set aside additional time to make reconciliations, when they could be using this time to focus on other invoices or projects.
Consistently reaching out to vendors to make reconciliations also requires your vendors to set aside time to help fix your errors, and can become embarrassing if it continues to happen, and may even deter vendors from partnering with you in the future. Manual data entry and the errors that comes with it also bring more complexity to the month-end closing process in finance organizations, which is already stressful enough.
2. Invoice Approvals
With manual AP, it is necessary to send invoices to the appropriate department head in order to verify the amount being billed is correct. This requires tremendous diligence to juggle dozens of email threads at a time and follow up with department heads that fail to respond. Paper-based systems often take longer to manage and create opportunities for invoices to fall through the cracks and never get paid, leading to unhappy and impatient vendors – who are a key stakeholder in the success of the business.
While invoice approval is a critical process in AP, its success currently hinges entirely on staff’s ability to perform a painful, tedious, and disjointed process that requires their full attention.
3. Matching Invoices to Corresponding Purchase Orders
Purchase order (PO) matching is utilized to skip the staff approval process and verify the invoice amount with the corresponding PO that was initially sent by a vendor. For businesses that do this manually, the process matching up and comparing every PO to its corresponding invoice is incredibly tedious.
Employing this practice requires a lot of time and can lead to adding additional headcount to your team as invoice volumes grow. However, increasing the number of employees is only a short-term solution and is not practical as businesses expand. It will likely become a recurring issue of playing catch-up rather than getting ahead of the curve. Additionally, adding new members comes with overhead, as everyone needs to be trained, onboarded, and given time to adjust to the team.
4. Getting Checks Signed, Postmarked, and Mailed
While this process is simple and straightforward, it’s dependent on the presence of a CFO or Controller in the office to physically sign checks. This creates the potential for bottlenecks, as CFOs are often traveling. Signing hundreds of checks is also a time-consuming process for a CFO, whose time could definitely be put to better use for a company. As payments get pushed back, deadlines can be missed, leading to unhappy vendors and a diminished quality of service that they provide to your business. This also means that your business is likely failing to capitalize on early-pay discounts.
The cost of check stock, stamps, and envelopes can also add up quickly. While these costs may seem miniscule at first, for businesses making over one hundred check payments each month, the costs can easily pile on and take a significant chunk out of revenue. Additionally, using paper checks increases the risk of fraud, and the cost of fraud can create a huge financial burden on the business as well as damage its reputation.
How Businesses are Addressing These Pain Points
Automation combats each of the four most tedious tasks of manual accounts payable. One report states that 90% of respondents believe there are advantages to automating tasks at their organization, particularly a reduction in manual errors (48%), an increase in the speed at which tasks are completed (42%) and better quality work product (38%).
Teams are addressing these pain points by automating accounts payable with MineralTree, and streamlining the entire invoice lifecycle, from invoice data capture through payment. MineralTree works with thousands of middle-market business, and continues to enhance its product to further streamline and eliminate inefficiency from accounts payable in new ways.