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7 AP processing pain points and how to overcome them
Accounts Payable pain points can typically be addressed by introducing an AP automation solution and switching away from manual AP processing.
From high-processing costs to fraud risk, there are a number of pain points in accounts payable processing that keep AP managers reaching for the antacids.
In fact, Deloitte identifies seven key AP processing pain points and unmet needs1 faced by middle-market buyers and suppliers:
- High-processing costs
- Supplier payment methods
- Payment delays
- Limited transaction visibility
- Manual AP processing
- Fraud risk
- Remittance data processing
Deloitte provides some sobering statistics to support the inclusion of the above seven AP processing pain points.
Seven AP processing pain points
1. High AP processing costs
Thirty-five percent of businesses report high AP processing costs as a pain point with traditional payment methods. It costs a typical accounts payable (AP) organization nearly $8 to process a single supplier payment. In addition, 62 percent of costs stem from labor.
2. AP processing payment delays
Thirty percent of middle market businesses say payment processing time is a major pain point. Payment delays can result from a holdup from suppliers/buyers or slow processing methods. It takes an average of approximately 30 days to complete a payment. Even so, around 47 percent of suppliers are paid late for their products or services.
3. Manual AP processing
Manual AP processing is another pain point. Buyers lack adequate automation capabilities for AP processing due to limited back-office integration with electronic payments and electronic invoices, lack of IT resources, and difficulty in convincing customers/suppliers to use ePayments.
4. Remittance data processing in AP
Reconciling multiple invoices, and receiving and processing remittance data can be a serious pain point in AP processing, especially when there are missing data elements in the files, different file formats, and lack of back-office support for automated remittances.
These AP processing pain points are in the $3.3 trillion—and growing—middle-market B2B payments processing space, and haven't received the same degree of attention from financial institutions as consumer payments or corporate payments aimed at large companies.
5. AP processing supplier payment methods
A mismatch in the payment methods preferred by buyers and suppliers also poses challenges, making it another pain point in AP processing – because buyer payment decisions are heavily dependent on the payment methods their suppliers use.
6. Limited transaction visibility in AP
A limited end-to-end view of the transaction associated with multiple payment methods is a pain point in AP processing because it typically results in extra costs, delays, chargebacks, and payment cycle disruption.
7. Fraud risk in AP
Risk of fraud is high, as there are limited authorization controls for each transaction and some existing payment methods don’t always provide the right level of security for online payments. In a 2014 survey, about 22 percent of middle-market businesses reported that they faced payment fraud.
How you can overcome AP processing pain points with Ascend Software
Are any of the above AP processing pain points something you're familiar with? Our Workday Certified AP solution enables you to scan, clean, store, validate and access your invoice data quickly, accurately and securely. In other words, Ascend is able to mitigate or eliminate many of the AP processing pain points.
Reduce AP processing costs and manual touches
Ascend’s SmartTouch AP™ is an advanced accounts payable automation software designed to help you process invoices with fewer touches. SmartTouch AP™ helps relieve AP processing pain points by:
- Reducing manual steps through automated invoice imaging, data entry, coding, tagging and file storage.
- Reducing overall operational costs associated with manual and paper-based processes.
- Increasing overall processing efficiencies and enabling your AP team to focus on high-value tasks.
Be more accurate with data extraction in AP
SmartTouch AP™ is built on top of proprietary Analytical Information Recognition (AIR) software, which recognizes images from paper documents and translates captures entire electronic documents. A step above basic Optical Character Recognition (OCR) used by other solutions in the market, AIR can intelligently locate and extract data from structured and unstructured sources. This means that data capture is not template-based – if your supplier changes their invoice layout, you won't suffer from lower data recognition rates.
You’re able to reduce data entry errors and the time associated with making corrections – which frees up more time and money so organizations can utilize their resources elsewhere.
Gain transaction visibility in AP
SmartTouch ECM™ is a drop-in Enterprise Content Management (ECM) solution that gives you secure report and file archiving and conventional web viewing. Adding ECM to your AP automation strategy gives you more flexibility and reduces the pain point of limited visibility by allowing you to access associated files at any point in time from any location.
Reduce the risk of fraud in AP
Advanced fraud prevention analyzes financial transactions to prevent fraud before it occurs. We analyze and identify suspicious transactions and present results on a summarized dashboard where you can easily drill down for details.
1. Deloitte, B2B payments for the middle market