The popular belief in AR departments is that customer AP departments don’t want to make payments on-time. There are several reasons why this myth doesn’t hold water. One of the most compelling reasons why is auditing.

Here is why auditing requires AP to make on-time payments.

Policies, Procedures and Controls

If an AP department is not making on-time payments, it is an indication that policies and procedures are not being followed. This brings into question the adequacy of controls and raises compliance issues. After reviewing policies and procedures to make sure there are no control weaknesses, auditors test to verify compliance with the policies and procedures. If there are exceptions which cannot be explained adequately, auditors will expand the scope of testing to see how extensive the compliance issues are.

Compliance issues indicate a control weakness. Control weaknesses are noted and discussed with management and the Audit Committee of the Board of Directors. AP departments will follow policies and procedures and pay vendors accordingly to avoid control weaknesses and compliance issues.

AP Fraud

Not following AP policies and procedures, including not making on-time payments can be a sign of possible AP fraud. When vendors are not paid on-time it could indicate that cash is being diverted to make illicit payments to fraudulent vendors set up by company employees.

If fraud is suspected it could require a fraud audit which can be an expensive, time consuming review, which may possibly lead to a delay in the annual audit and issuance of financial statements.


Not paying vendors on time could result in problems with balance confirmations. Balance discrepancies due to late charges and unrecorded deductions could cause reconciliation problems and delay the audit process. It is difficult to get confirmation of AP balances under normal circumstances, and may be even more difficult if payments are not being made on-time.

Audit Cost and Delays

Problems caused by not paying vendors on time can increase the cost of an audit and potentially cause a delay in the audit and issuance of financial statements. This is a major issue for publicly-owned companies which are subject to reporting deadlines, and may lead to problems with shareholders and creditors.

These potential problems are a strong motivation for companies to make on-time payments. AP departments want to avoid audit problems and pay vendors on-time. Automation makes this possible by eliminating the manual processes that can cause delays in processing payments. Automation increases efficiency, reduces costs and results in increased profits, cash flow and shareholder value.

Lockstep Collect, a leader in cloud-based credit and collection platforms, can help you collect cash in 4 ways:

  • Cloud-based solutions
  • Automated customer communications
  • Customer self-service
  • Collections Activity Management

Lockstep Collect is an experienced software partner that can help you maximize your collections and cash flow in the new normal.

If you would like to learn more about how you can benefit from automated credit and collection solutions, please contact Lockstep Collect at