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The biggest risks of getting AP wrong

31st May 2023
Brought to you by
Aurelia logo
Aurelia are the automation and software experts for accountants and finance leads. We want to to...
Save content
Have you found this content useful? Use the button above to save it to your profile.

Accountants know that getting anything wrong is a problem. It goes without saying that, when you’re working with your clients’  financial information, the smallest error could spiral into big problems for you and your clients. This often comes with a feeling of shame that you could have done things differently. Or better.

Risks of getting AP wrong | Aurelia on AccountingWeb

But the reality is that it’s hard to go about your day-to-day worrying about every last thing that could go wrong while you have paper receipts piling up on your desk, multiple client meetings and VAT deadlines on the horizon. So, as you’re juggling various other priorities, it’s easy to shrug off the risks that errors in accounts payable (AP) could lead to and think ‘I’ll worry about it later’.

Let’s take a closer look at the potential problems it can cause for you and your clients, and how tech can help minimise the risk.

Late and incorrect payments hurt your client’s reputation

Good relationships are essential in business, and if your clients are known for paying correctly and reliably, they’ll find it much easier to build strong partnerships with suppliers. Fast forward a couple of months and your clients are enjoying discounts, long-term agreements and a hassle-free purchasing process. This, in turn, can lead to discounts and long-term agreements, and an overall smoother process. 

On the flipside, a poor payment reputation is damaging to your clients’ relationships – it makes suppliers think ‘oh, not again’ when they see your clients’ name on a PO. Paying late or incorrectly has knock-on effects for suppliers’ cashflow, and errors take time to correct. And the more it happens, the more your clients will be dealing with harsh payment terms, requirements of upfront payments, higher deposits or even rejections. 

Will your clients blame you? Potentially. While in a lot of cases your clients will hold the keys to the bank account, they rely on you to keep an eye out on unpaid invoices and due dates. 

Errors impact your cashflow and take up time

Errors and delays in accounts payable don’t just affect suppliers: your clients will feel the pain of those, too. Overpayment or duplicate payments take much-needed cash out of their business, which then takes time to recover.

A large number of these problems come down to manual data input (just think of the damage a stray zero could cause or problems with communication and organisation. 

Now, each step from working out what went wrong, chasing the various people involved to then fixing the problem is a costly, stressful and time-consuming process for both you and your client.

While you might be used to processing invoices manually, especially for smaller amounts or clients with low volume of purchases, automating as much as possible can save you a lot of headaches and nervous nail-biting.

Accounting tools have moved on so much that they are able to offer almost no-touch invoice processing and give you a confidence score so you can only bother with keying in the data manually when absolutely necessary. Plus, if anything does go wrong, you’ll have access to a full breakdown of who did what and when. 

Poor processes leave you open to fraud

While many AP problems are the result of innocent errors, poor processes in this space can also leave you open to fraud. Messy process and a half-baked tool to handle AP and you’re suddenly more prone to false invoices and manipulated records.

A 2022 report by the Association for Finance Professionals found that AP departments were the most susceptible to email scams, with 58% of respondents saying their AP departments had been compromised through email scams. 

Now the scary stuff. AP fraud can also come in from suppliers or even internal staff. of And in some cases, by both in collaboration. 

Again, with an automated AP system you are bringing better security, clearer segregation of duties, higher-quality data and greater visibility to your practice. All of this will safeguard you from fraud. 

Aurelia’s Invoice Inbox is the next generation of accounts payable tool, combining OCR technology, machine learning and payment capabilities to deliver a smart and smooth accounts payable experience. 

It automatically and accurately extracts data to the line item level from invoices of any format. And, through the connection to your accounting software, it reconciles them instantly – even if the invoice was paid after it was sent to your accounting tool. (Yes, you can forget about logging in and out of your accounting tool to mark an invoice as paid!)

You can now try Invoice Inbox with 1-3 clients for free. Sign up or get in touch at [email protected].

Try Invoice Inbox for free