Tackling Accounts Payable Challenges: Effective Solutions
Overcome Accounts Payable Challenges with These Effective Solutions
Working on an accounts payable team is never dull. In fact, it’s downright overwhelming.
We asked a few AP and vendor desk staff in our community about the demands of their job. Their experiences reflect what many people in their field have to tolerate every day.
“It’s easily a 40 hr/week job just to answer phone calls and emails about vendor status.”
“I got tricked by a fraudster. I was told if it happened again, I would be fired.”
–Vendor Desk Manager
“Every time I change vendor information, I feel like I have a grenade in my hand with the pin pulled.”
Here’s the deal. Accounts payable challenges are a constant struggle for finance, procurement, and accounts payable teams in higher education and local government organizations.
More often than not, issues lead to inefficiencies, increased costs, and strained supplier relationships.
If you can relate to any of the quotes above, this blog is for you.
We will delve into the top accounts payable challenges faced by these professionals, and how to resolve them for good.
This topic is so important because we’ve seen firsthand how many accounts payable professionals struggle with unrealistic workloads and expectations.
In fact, many teams attended our in-person event where they learned best practices they could implement right away to begin improving their processes and strategy.
Accounts payable managers and teams are facing burnout due to being overworked, under-appreciated, and dealing with high employee turnover.
In fact, 75% of AP teams recently polled reported an increase in report processing. Additionally, they’ve had to work more hours to compensate for this extra workload.
Burnout among AP staff also stems from constant change in their workplace. About 50% of teams polled reported feeling burned out from workplace changes, such as working longer hours and adding staff.
Why do challenges in accounts payable exist in the first place? Let’s look at a few root causes.
Debra Richardson, AP vendor setup and maintenance expert described this problem perfectly.
We have to start realizing that the vendor desk is like the U.S. Mint Police. Just as the U.S. Mint Police guards the United States’ gold at Fort Knox, AP and vendor desk staff are the frontline guards of the organization’s gold, or money.
However, the salary for an AP Manager is similar to that of a fast food employee.
The disproportionate salary of AP Managers often stems from a lack of fundamental understanding–from both leadership and other departments–about the importance of vendor management.
If higher-ups realized all of the ways that AP and Procurement teams protect the organization from fraud, ensure that all suppliers are paid, and help generate revenue, these teams would be compensated much more competitively.
Additionally, the ad hoc nature of a typical vendor management strategy contributes to accounts payable challenges.
AP duties typically involve manual processes that create more work for them while increasing compliance and cybersecurity risks. Specifically, these duties include:
Many organizations still rely on outdated methods like sending checks through mail or using spreadsheets for tracking unpaid invoices, which further complicates their tasks.
So, how do organizations overcome accounts payable challenges once and for all? Through the strategic use of people, process, and product.
In other words, your organization needs a combination of automation technologies and effective collaboration between different stakeholders.
By adopting a strategy rooted in people, process, and product, you can make your accounts payable strategy more efficient, secure, compliant, and profitable.
Establishing strong relationships with suppliers is crucial to ensure timely payments and avoid late fees or penalties.
Communicate regularly with vendors about supplier payments, resolve issues promptly, and keep them informed about any changes in payment schedules.
Additionally, keep your list of suppliers as updated as possible to help minimize makes and confusion.
Debra advises organizations to review all of their vendors every quarter. Revalidate all current vendors. Deactivate any vendors with whom you haven’t worked in 15-24 months.
It’s also crucial to maintain a strong relationship with your organization’s leadership and other departments. The more institutional support you have for vendor management, the more compliant, secure, and profitable your strategy will be.
Incorporating accounts payable automation software into your operations can help streamline invoice processing, scheduling payments, and managing vendor data.
Automation also reduces manual effort required while minimizing errors that often plague businesses using traditional methods like paper invoices or sending checks.
When you automate your vendor onboarding and management processes, you can expect results such as:
Improved Accuracy Through Reduced Errors. First, accounts payable automation software helps minimize errors commonly associated with manual processes, such as duplicate payments and incorrect invoice amounts. You can ensure greater accuracy in your financial records while reducing the risk of compliance issues arising from human error.
More Efficient Operations. Next, you’ll experience easier, faster invoicing, payment scheduling, and transitioning between procurement and payment stages with purchase order-based invoices.
Faster Problem Solving. Also, automated systems can help identify and resolve issues that may plague your business, such as unpaid invoices, payment delays, and fraudulent invoices.
Safer Data. Finally, an automated process reduces the number of paper invoices and checks, which saves time and reduces the risk of lost or misplaced documents. Additionally, private supplier data will be in a much more secure place, rather than floating around on papers and emails.
One of the most significant ways to address accounts payable challenges is by obtaining support from leadership and other departments within the organization.
To do this, it’s essential to highlight the importance of accounts payable teams in maintaining healthy cash flow for the organization, mitigating cyberthreats, and preserving important supplier relationships.
By demonstrating how efficient AP processes contribute to overall organizational success, you can gain buy-in from top executives.
To foster collaboration between different stakeholders, consider these strategies.
First, encourage regular meetings between accounts payable team members, procurement specialists, and finance professionals to discuss issues that arise and develop solutions together.
Specifically, consider hosting lunch n’ learns. Invite colleagues from other departments and organization leadership. Present on what the vendor desk does and why the vendor desk is so critical to the success of your business.
When you change your current vendor management process by implementing a digital platform, you’ll need to train them on the new process. This gives your team a perfect opportunity to communicate with more people about how the vendor desk adds significant value to your organization.
When it comes to getting support from more people in your organization, education about what you do is key. Let’s use our customer NC State University as an example. When NC State automated their supplier onboarding with PaymentWorks, they created an online resource center and a campus manual for departments to use when learning the new process.
This helped ensure that the whole campus became knowledgeable about the new product and process, which spurred department heads to promote it to their teams, and in turn, helped NC State’s vendor desk see incredible results from automating.
Next, if you want more visibility for the vendor desk, tell interesting, human stories about what you do. Specifically, share about instances when you identified and overcame (or not) fraudulent activity.
All of your colleagues need to know the threats targeting your organization so that they can take action as well.
Furthermore, these stories, especially when told with human, personable details, get attention. Build an arsenal of fraudulent activity stories to have ready to go when speaking with other departments and leadership.
Having support from leadership and other departments is key to overcoming accounts payable challenges. When you get these audiences to recognize the vital role of the vendor desk, they are more likely to support your projects, follow best vendor management practices, and help your organization see concrete results from your work.
Create clear and concise documentation that outlines the role, responsibilities, and functions of the vendor desk. This document should highlight the value it brings to the organization and explain the impact of effective vendor management on financial operations.
Generate regular reports that showcase key performance indicators (KPIs) and metrics related to vendor management. These reports can include data on invoice processing times, vendor payment accuracy, discounts captured, and cost savings. Visualize the data to make it more accessible and understandable.
Request to attend relevant meetings, such as finance team meetings, departmental reviews, or strategic planning sessions. Use these opportunities to provide updates on vendor management initiatives, share insights, and address any questions or concerns.
For example, request a meeting with your organization’s insurance buyer. Talk to them about the policies that protect the organization currently.
Also, mention any gaps you notice from a vendor management standpoint, such as protection from financial losses due to fraudulent payment activity.
Stay updated on industry trends, emerging technologies, and best practices related to vendor management. Share this knowledge with leadership and other departments, demonstrating the vendor desk’s commitment to continuous improvement and staying ahead of industry developments.
Actively seek feedback and suggestions from leadership and other departments on ways to enhance vendor management processes. By involving them in the process and valuing their input, you can foster a sense of ownership and build stronger support for the vendor desk’s work.
By employing these strategies, accounts payable staff can effectively educate leadership and other departments about the importance and impact of the vendor desk’s work.
Building awareness and understanding will foster stronger support and appreciation for the crucial role played by the vendor management team within the organization.
To sum up, accounts payable teams in higher education and local government organizations face numerous challenges.
These include inefficiencies in traditional AP processes, impact on financial forecasting and supplier relationships, and the need for automation technologies to improve accuracy and speed.
However, there are several actions AP teams can–and should–take to improve their efficiency, profitability, and burnout levels. These include maintaining good ties with suppliers and adopting automation technologies, such as a digital supplier onboarding platform.
Perhaps most importantly, however, the vendor desk needs unflagging support from leadership and other departments. The best way to get organization-wide buy-in and support is to take a multi-pronged approach to engaging with various company stakeholders.
All of these actions will help ensure an efficient, secure, compliant, and profitable vendor management strategy.
We have plenty of resources to support you. Explore our blogs below.
If you’d like more personalized support, schedule some time to speak with our team.