Late payments have become a major problem for most organizations across the world. Failure to pay suppliers on time impacts vendor relations, which could lead to supply disruptions, and costs the organization money. Manual accounts payable processes are time-consuming and are error-prone. An automated system accelerates the process as well as ensures compliance with policies and eliminates the risk of errors.
Manual accounts processing provides unpredictable results. The practice of manual AP processing could also lead to long work hours and missing payments. A recent study has found that many companies are facing the stress and expense of defending lawsuits for making late payments to suppliers.
Automated invoice processing puts businesses in control of their finances. Though the main goal is to avoid late payments, AP automation also puts important data at the fingertips of the AP team. Real-time financial data helps make early payments to capture potential vendor discounts and hence save money. Also, the data related to critical cash flow enables management to make crucial decisions about financial policies based on the organization’s current situation.
The Effect of Late Payments
Late payments result in penalties, missing out on early payment discounts, and the destruction of vendor relationships. Late payments also affect global business and finance. A recent study stated that most startups are suffering and closing their business due to repeated late payments.
The use of an automated system can make a difference in the accounts payable process. Routine tasks can be performed automatically at best speed and accuracy. The AP team will have more time to become strategic business partners, providing crucial financial updates that help fuel the decisions made to guard the organization’s financial stability and fame with vendors.
The Cost of Late Payments
Late payments have a significant impact on an entire business, including short-term cash flow stability and long-term bottom-line results. With the latest AP automation systems available today, companies no longer need to miss payments or be late due to lagging with manual processes. AP automation is a valuable investment because it ultimately helps lower costs, boosts productivity, and increase profits.
Businesses that implement AP automation will experience better ROI. Streamlined processes improve efficiency by saving time on daily tasks, such as the approval of invoices and payments. An online AP solution enables the team to work together remotely to find issues and reduce delays in verifications and approvals. Each stakeholder can analyze the latest financial data to identify invoicing and payment patterns that could cost the business money. With the smart use of technology, the AP team can use it’s time for more beneficial tasks, such as actively looking for ways to save money on invoice payments.
Maintaining Supplier Relationships
Supplier relationships are crucial to the success of a business. Organizations rely on vendors to create their products and expect quality products at competitive prices. Late payments will have a negative impact on supplier relationships. Some vendors may charge late fees, while some may terminate the contract due to late payment.
A disturbance in supplies can stop production, leading to significant losses for the company. It can be hard to find new suppliers that are reliable and charge a reasonable price. This has a significant impact on the company’s reputation, production time, and cost of products. AP automation enables the finance team to stay on track to stop late payments and work proactively with suppliers if a problem arises.
Late payments can ruin a company’s reputation, production, and overall morale by compromising supplier relationships. Automated invoice processing eliminates the errors related to manual processes to ensure businesses are always on the right financial track.
The Benefits of Automated Invoice Processing
Implementing an automated AP system helps companies cut costs and increase working capital while the AP staff enjoys a better quality of work as they leave routine manual tasks behind for more important ones.
Here, we list some of the key benefits of AP automation:
- AP automation helps businesses save money and recognize a considerable ROI
- Reduces the hassle, time, and cost associated with manual invoice approvals
- Streamlines operations and puts relevant information within reach to everyone at all times and everywhere
- Reduces administrative burden on the AP team and makes it a strategic partner in the business growth
- Helps schedule invoice payments at best possible times
- Ensures compliance with state and federal rules
- Provides high visibility into budget management, planning, and forecasting
- Reduces fraud and double payments