AP approval issues can slow payments. Customer AP departments want to pay you on time, otherwise they could have problems with auditing, vendor relationships and cash budgeting/forecasting. Sometimes the reasons for slow payments are innocuous in nature. Here are three examples of AP approval issues which can slow payments, that are simple and straight forward, but nevertheless require your AR team’s attention to combat.
AP Filed Incorrectly
Something as simple as incorrect filing can put your invoice in the wrong file. This error may never be recognized and the customer’s AP department may not realize that an invoice is past due until a reminder email is received or your AR team follows up.
If your customer uses a manual AP system and pays with paper checks, a simple filing error can take weeks to clean up with document requests, approvals, check processing and mailing, and posting on your end.
AP Lost Track of Due Dates
Whether due dates are entered incorrectly by your customer’s AP department or they just lost track of them in a manual AP system, due date errors can take weeks to straighten out for the same reasons as filing errors. The onus is on your team to follow up because AP won’t know an invoice is past due in this case unless you tell them.
AP Approvals Are Slow
There is no one-size-fits-all AP approval process. Some customers take more time for a variety of reasons including: manual systems, tight controls and staffing issues.
You can combat slow payment issues in several ways including:
- More frequent and tailored email reminders – Send reminder emails more often, but also know your customer and tailor reminders to be more effective.
- Provide an online portal – A self-service portal can help to accelerate payments in a number ways including providing access to documents and account information, and capability for reporting disputes and making electronic payments.
- Follow up more frequently – Contact customers more often and use the opportunity to build relationships that can increase on-time payments and cash flow.
AR and AP issues are easier to deal with if you have automated systems. Cloud-based AR and AP solutions with self-service portals and automated processes keep vendors and customers connected no matter where they are located.
Automation can help to reduce or eliminate the reasons for getting paid late. Automation makes this possible by eliminating or reducing the road blocks and delays that can cause late payments. Automation increases efficiency, reduces costs and results in increased profits, cash flow and shareholder value.
Lockstep Collect, a leader in AR automation, 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 AR automation, and improve cash flow 31% or more take our AR Automation Product Tour.