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4 Supplier Payment Risks and How to Avoid Them

17th Jul 2023
Brought to you by
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Nook is a powerful payments platform that streamlines the Accounts Payable process, bringing...
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4 Supplier Payment Risks and How to Avoid Them
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Despite being one of the core pillars of an outsourced financial function, accounts payable (AP) remains one of the most stubbornly unsolved problems in accounting. 

While cloud accounting, digital approval tools and online expense capture solutions have done much to streamline elements of the process, building an efficient, secure, comprehensive process remains a challenge. In a process with multiple steps, contingencies and tools, joining the dots still requires manual work for most firms. And without end-to-end control, errors can quickly creep in.

The uncomfortable truth is that incomplete AP processes put you and your clients’ efficiency, visibility and security at risk. Here are four risks you may be running and how to avoid them.

Payment Bottlenecks and Inefficiency

Manual accounts payable processes that rely on multiple systems are slow, unreliable and time-consuming, requiring a high degree of manual intervention at each stage, from data entry to approvals and execution.

While cloud accounting and AP automation tools for data entry have become commonplace, working with disparate, single-task AP apps still requires accountant or bookkeeper intervention to close the gaps in the process such as:

  • Managing approvals via email or chasing documentation for supplier bills
  • Requiring clients to execute payments within their banking platform from a long spreadsheet of line items
  • Accountants waiting for clients in order to begin a slow, manual reconciliation process with incomplete bank feed data

This can result in a monthly hangover from the payment run, with a long period as teams manage the closing of the books, line by line in the accounting software.

Moving to a single system with Nook enables accountants to create a single, efficient process that creates end-to-end efficiency in sourcing,  approving, executing and reconciling the payment run, enabling the rapid delivery of EOM accounts, letting clients focus on the future faster instead of chasing details to close the month.

Fraud and Accountability

Helping clients maintain control of cash is one of the primary value-add points of an advisor. But without a robust approval system, integrated with a clients’ larger financial management solution is a red flag for control, fraud and payment visibility.

  • Clients working with email-based supplier invoice approvals can easily lose track of what counts as a legitimate supplier invoice.
  • Siloed data systems can easily produce duplicate invoices, falling behind on supplier bank details and a lack of clarity on who is responsible for payment accuracy and integrity within the business.
  • High volumes of payments provide ample scope for errors in firms, with limited ability to track approvals between systems and the pressure to close the payment cycle each month for clients and generate management accounts.
  • Balancing control and efficiency can often result in firms prioritising continuity over payment accountability, leading to inefficient, error-prone approvals.

With a holistic payment system, firms don’t have to choose between offering speed and controls – with integrated approvals and a connected payment journey, Nook enables clients to track every step of the payment journey from entry to execution from a single source of truth, centralising every step of every transaction payment with at-a-glance visibility and control.

Payment Blindness

For larger practices, managing multiple suppliers for a range of clients, the work of dealing with multiple invoices per month, each with varying payment terms, currencies and approvals can quickly mount up.

  • Working with patchwork payment systems, managing invoices and approvals between emails and spreadsheets often means key details are siloed in different systems and workflows
  • Multiple data sources make it nearly impossible to accurately judge outgoing costs, track available cash flow in the business or appropriately  manage supplier payment timelines.
  • Missed payments can quickly creep in, forcing suppliers to chase for payment, damaging supplier relationships and potentially delaying services, product delivery or project completion due to the inability to track and deliver payments on time.

That’s why it’s so important to work with a connected process, managing the journey from invoice to approval, tracking and payment with connected data and visibility. This requires either a connected-suite of spot solutions, or a single, connected platform. 

Nook’s flexible AP solution can integrate at any point on the payment cycle, connecting spot solutions with API-integration to close data gaps or managing the entire payment cycle from a single system, ensuring suppliers are paid on time and finance teams have the data they need to manage cash in the business.

Client Security

The task of making a payment is a persistent challenge in the payment workflow given the  crucial nature of supplier payments and the sensitive access required to execute them.

Many accountants are understandably wary of the risk of making payments on their clients’ behalf, preferring to manage the process up to the point of payment and then manage reconciliations after – those who handle payments on behalf of the client face significant risks.

  • Working with bank account access for clients brings a high level of risk for firms, with errors on client accounts potentially leading to money in the wrong hands, fraud risk and damaging relationships.
  • Firms who offer payment services will often mitigate this by controlling access to certain individuals, though this then creates its own bottlenecks, with payments grinding to a half if that individual is unavailable, since delegation is seen as too risky.

While the most common solution is to have clients make the payments themselves, this prevents firms from offering a truly comprehensive outsourced finance function. Nook is a different breed of AP solution, enabling clients to give their accountants controlled, role-driven access to their accounts to make payments within defined limits, with robust multi-factor authentication (MFA) to eliminate risk while enabling accountants to offer a complete service. 

This enables more effective delegation and control of payment processes, enabling firms to offer payment services at scale without the risk of having to manage multiple team members accessing client accounts.

Close the Gaps in your AP Process

For firms looking to offer a comprehensive outsourced accounting service, AP is a massive opportunity for efficiency, value and client control, but this requires moving beyond the incomplete approaches that remain all too common.

Nook is a complete solution that streamlines the entire AP process, combining invoice processing, approvals and supplier payments on a single platform. Whether you need to connect spot solutions or manage the whole process, Nook closes the gaps in your AP journey to help you manage payments at scale with full confidence, closing payment runs faster and without the risk.

To find out more about Nook and the future of AP, book a demo with one of our payment experts today.

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