Top AP Document Management Challenges for 2020
Effective, efficient accounts payable (AP) processes are critical to business success. But when it comes to forms capture and invoice processing, costs and complexity are often considered inevitable, rather than adjustable.
All too often, best practices in document management are built upon past problems, rather than emerging AP solutions. In this article, we’ll explore the most common challenges organizations face when it comes to managing AP processes.
Document Management Dilemmas
When AP departments cling to manual processing of paper documents, they risk falling prey to a host of issues. First of all, as noted in the 2019 Payables Insight Report, nearly half of all organizations require two or more approvals for each invoice. This means that documents are not only duplicated, which increases the possibility of mistakes, but also that the amount of documents handled can double or triple in volume.
Furthermore, the speed of document creation is increasing, even as web and cloud-based forms are beginning to close the gap with paper-based processes. Existing processes are unable to hold back the rising tide of digital documentation, and bridging the gap between manual and digital processes often adds another costly layer of complexity.
Manual Processing Mistakes
Despite the increasing availability of digital solutions, many organizations still rely on manual data entry and analysis. In fact, 57 percent of organizations still enter all invoice data manually.
This reluctance to make the move to digital may be due to the benefit of past successes and the familiar structure of manual processes. Unfortunately, manual data entry for AP processes leaves enterprises prone to human error. In fact, research suggests that the basic error rate for human data entry hovers just above one percent. That may sound inconsequential, but when companies are dealing with thousands of documents that are often disseminated and duplicated across multiple staff members, that one percent can quickly turn into a much larger problem.
Beyond the general difficulties defined by dated document management processes and manual entry procedures, AP departments face a host of challenges, including:
- Routing Errors: Each routing step introduces the potential for error if documents are sent to the wrong person, forms are missing key data fields, or simply aren’t sent at all.
- Lost/Missing Invoices: Without effective, end-to-end tracking, physical invoices can easily be misplaced and digital documents incorrectly versioned, increasing the risk of inaccurate, delayed, or duplicated payments.
- Paper Preferences: Reliance on paper forms, checks, and invoices significantly raises security risk. As noted by Business 2 Community, 70 percent of companies reported potential exposure to check fraud in 2018, thanks to paper-based processes.
- Lack of Visibility: Manual data entry complicates visibility by creating physical stores of data that are difficult to access, frustrating to file, and almost impossible to analyze at scale.
- Dropped Discounts: Some vendors offer early payment discounts that could be overlooked. And, while many companies decide to pay late, there may be a late payment fee that could cost the company in penalties.
- Compliance Concerns: Upon the request of regulatory agencies, companies must be able to provide complete histories of payment processing activities along with invoice tracking and change management reports.