The 5 Biggest Challenges Faced by Accounts Payable White Paper

Improving financial efficiency and cash flow on a corporate scale is a truly daunting task. It’s normal to feel stress under the constant pressure to succeed. With so many stakeholders in play, managing such complex processes presents significant logistical challenges; how can you improve efficiency when there are hundreds, if not thousands of invoices in action all at the same time? Here are the five biggest challenges you’re likely to face on your quest to optimize your company’s finances.

1. Paying Suppliers on Time

Suppliers can be your greatest ally in the battle to reduce costs and optimize financial efficiency. Good supplier relationships are often mutual and offer equal benefits to both sides if maintained. In order to achieve such a harmonious collaboration, it’s essential you hold up your end of the bargain and ensure they are paid on time, every time. In an ideal world this would be easy to achieve, but with cash flow challenges, meeting 30 day settlement terms can be tricky. Automating your AP processes will help you to better manage paying invoices on time and take advantage of the early settlement discounts on offer.

2. Removing Paper and Manual Effort

Paper-based systems rely heavily on manual effort which is extremely inefficient and extends the time taken to process invoices. That is a simple fact in modern business. They use unnecessary resources, create logistical issues and consume space and time. They also require a large amount of manual input, which is prone to human error, and offer little process transparency. It’s becoming increasingly difficult to justify supporting paper over digital alternatives. Implementing the
right technology can offer complete visibility of the processes in play. This can deliver significant insight into the systems involved and assist in the movement and management of invoices. With the right technology in place, you can free up time and manpower and increase the number of invoices that are processed without a glitch. This can help you significantly improve productivity and cut costs. Automation should be at the heart of your cost management strategy as it presents one of the greatest opportunities to optimize efficiency throughout the business.

3. Reducing Operational Costs

Managing operational costs is an ongoing struggle for the majority of companies irrespective of industry. Businesses are regularly looking to cut operational costs wherever possible to improve profits and optimize performance. Driving down queries, corrections and exceptions helps to reduce the cost per invoice. Unless you have the right technology available, you will struggle to identify the weak links in your operational processes. This can lead to aimless cost cutting and has the potential to reduce efficiency and exacerbate costs further.

4. Improving the Efficiency of Data Management

With automated systems in place, you have access to large quantities of data. Used correctly, this information can optimize the efficiency of your end-to-end financial process, provide insight, and improve decision making. Detailed reporting and dashboards offer the information you need. However, this is where the problem arises: how do you identify which data needs to be made available to whom in your organization and which data delivers genuine value? Differentiating between actionable insights of what to approve and pay, versus useless background data, can present a major headache. With the right systems in place, you can mitigate data mining and get straight to the information that’s important to you.

5. Managing Cash Flow

Cash flow is a dominant metric; everything you do revolves around ensuring money is available at the right time to come from or go to the right place. However, identifying financial priorities and the most beneficial course of action can be exceptionally challenging. Meeting supplier settlement terms based on available cash needs to be carefully balanced with your Days Payable Outstanding metric. Of course, these dilemmas can be mitigated with improved financial management and more efficient AP processes. Better control helps in tightly managing the outflow of cash resources.