Accounts payable is known as an account within your business’ general ledger that refers to payable amounts to the suppliers or creditors. All high-functioning companies and businesses always have their eye on their accounts payable because if these accounts are ignored, they risk breaking their cash flow due to the lack of inventory or a complete shutdown due to breaking their supply chain and not having any products to release anymore. In this guide, we will be showing you 10 common problems and their solutions for accounts payable so you can avoid any speed bumps and focus on the growth of your business minus any of the hassle. Follow the right account payable solution for each common problem and your business will improve in no time.
Account Matching Errors
Matching errors in accounts payable can lead to serious consequences. To make sure that all invoices are handled correctly, AP departments perform three-way matching which means that they check that each invoice matches the order and the goods were really received by the company. Problems and mismatches happen frequently for multiple reasons, so as much as possible stick to the three-way matching process
An Exception to Invoices and Manually Following Up
AP departments spend so much time manually following up suppliers and creditors, which is one of the most time-consuming activities for them, time that they could always be using doing something else.
Purchases That Are Unauthorized
Nothing can mess your accounts up and track more than the unauthorized purchase of goods and services. To avoid problems like this, make sure to thoroughly go through who is working with you and keep an eye on your inventory and supplies. Unauthorized purchases can easily halt operation if the purchase is damaging enough to the cash flow.
Fraud and Theft
Fraud and theft can happen in AP when false claims of purchases have been made, or when inventory received does not match what was declared in the initial statement. This can be avoided by closely watching your cash flow and supply chain to see where the discrepancies occur.
Invoices that “Disappear”
The major downside to relying on paper trails and old-school bookkeeping instead of changing to digital, files can be lost and seemingly disappear. To avoid instances like this, it is best to go digital and track everything through digital spreadsheets in order to keep everything under a microscope and never miss a beat.
Double payment happens when there are multiple charged transactions with a supplier for the same instance. Automating your online bank transactions can easily solve this issue to assure you that once you have paid the supplier that there will be no repeats until the next cycle for payment or unless you would like to pay them in advance.
Early Payment Discounts
Early payment discounts are a great way to score a good deal for your inventory with the suppliers. Usually, they offer discounts on their supplies if you are able to make payments on time regularly, in bulk, or in advance. If your supplier is willing to negotiate, then you can definitely score amazing discounts by paying early.
How essential it is to automate your AP goes unsaid nowadays. Having digital copies of all your transactions and being able to pull them up at any time to your own convenience makes tracking your AP so much easier and involves a lot less time to accomplish.
Streamlining workflow and tracking each step personally is a great way to find points that can be more efficient and practical when done daily, software can even be programmed to do this for you to ensure all the right invoices get to the right people in a matter of seconds.
Three-way matching is the process of checking if the invoices match the supply delivered and the invoices requested match the needs of the company. Three-way matching can be automated as well by software designed to handle tasks specific to matching requests, demands, and supplies