This article is based on findings from the 2019 State of Accounts Payable.
While Executive and Manager-level employees both play distinctly critical roles in the process of paying vendors, it appears they have differing perspectives on what occurs along the way. According to the 2019 State of Accounts Payable survey there is significant perception discrepancy between seniority levels on the topics of fraud and payment timeliness.
These disparities are a symptom of a deeper issue within finance organizations: decentralization, disorganization, and manual processes. As long as businesses have paid vendors, paper reigned supreme and as a result, created a mission critical workflow disjointed and vulnerable to human error. Here are two examples of how manual accounts payable processes are creating misalignment within finance organizations.
1. Executives Are More Aware of Fraud Than Managers
While at least 67% of all Executive- and Director-level respondents indicated experiencing payments fraud, only 56% of Manager-level respondents indicated the same. This should raise concerns for executives, as it is possible businesses are unknowingly paying fraudulent invoices.
There are a variety of methods to infiltrate a business’s vendor payment process to claim unearned sums of money such as through business directory invoices, web domain renewals, duplicate billing, overbilling, disguised purchases, and others. Most of these false invoices involve billing for goods and services that the business never purchased in the first place, or for fees that are nonexistent. This puts an emphasis on the importance of carefully reviewing each invoice and ensuring it is verified by multiple parties before it is paid.
2. Executives Are Less Aware of Late Payments
63% of Executive-level respondents believe vendors are being paid on time. Meanwhile, only 52% of the Manager-level respondents actually facilitating the payments indicated that vendors were paid on time.
The approaches and strategies businesses take in order to ensure vendors are paid on time depend on industry, capital position, and the relationship between the business and the vendor. While some businesses capitalize on early-pay discounts, others wait until the last possible moment in order to optimize working capital. However, regardless of what a business’s payment strategy is, this disparity reveals misalignment between executives and their staff, and could adversely affect their business.
Accounts payable automation solutions like MineralTree’s Invoice-to-Pay establishes alignment by centralizing the end-to-end accounts payable process. By building fraud and payments controls into your AP process, you can mitigate fraud risk substantially, and offer your finance team huge benefits in terms of reduced human error and alleviated frustration all throughout the process.
Curious to learn more about how accounts payable automation can help your team leverage electronic payments? Contact MineralTree for a personalized demo.