AP departments want to pay on time to avoid problems with auditing, relationships and cash forecasting, but simple approval issues can slow payments. Here are three examples of mundane AP approval issues which can slow payments and require time and effort to resolve.
Invoices Filed Incorrectly
Incorrect filing can put your invoice in the wrong account. Your customer’s AP department may not realize that your invoice is past due until a reminder email is sent or your AR team reaches out.
With customers that use a manual AP system and pay with paper checks, filing errors can take several weeks to resolve with document copies, approvals, check processing and mailing.
Due Date Mix Ups
Whether due dates are entered incorrectly by AP or they just lose track of them in a manual system, mix ups can take weeks to resolve for the same reasons as filing errors. Your team needs to follow up because a customer’s AP department won’t realize that an invoice is past due unless you bring it to their attention.
Slow AP Approvals
There is no standard AP approval process. Customers can take more time for many reasons including: manual processes, stringent controls and understaffing.
You can resolve slow payment issues in several ways including:
- Frequent and customized email reminders – Send reminder emails more frequently, but also customize reminders to increase effectiveness.
- Online portal – A self-service portal can help to accelerate payments by providing access to documents and information, and the ability to report disputes and make electronic payments.
- More frequent follow up – Contact customers more frequently and develop relationships that will result in more on-time payments.
On-time payment issues are a less of a problem for companies with digital solutions. Accounts receivable and accounts payable cloud-based solutions with customer/vendor portals and digital processes keep vendors and customers connected whether they worked remotely or not.
Digital solutions can reduce or eliminate late payments. They minimize the issues that can cause delays in processing payments, resulting in increased efficiency, reduced costs, and increased profits and cash flow.
With a connected accounting solution for your accounts receivable and accounts payable teams to coordinate work with customers and vendors, you can go digital and enjoy the benefits of office automation.
Lockstep, a leader in cloud-based connected accounting solutions, can help you boost productivity and optimize cash flow with:
- Digital Onboarding – Collect master data directly from your customers and vendors
- Accounting Inbox – Make it easy to divvy up work and track progress
- Smart Automation – Automate menial task with accounting integration
- Online Accounts – Give customers and vendors online access to their accounts
Lockstep is an experienced software partner that can help you increase efficiency and accelerate cash flow.
If you would like to learn more about how you can benefit from connected accounting solutions, contact us!