10 Common Accounts Payable Issues and Their Solutions

2: Workflow Bottlenecks

Problem

The accounts payable process often involves numerous roles, rounds of approval, different payment methods and funding sources, leaving room for plenty of bottlenecks along the way.

Without AP automation, invoices can get lost in a stack of paper, an inbox or a “game of telephone”, delaying the approval process at multiple touchpoints. When it comes to payments, your payable process could get stuck waiting for sufficient funds to deposit into your account, causing even more workflow delays.

Solution

You can streamline your approval procedures with accounts payable software, assigning roles and privileges to send the outgoing payment to the correct approver(s) and track progress at every step. This allows all users to easily identify approval bottlenecks and send reminders.

With RBC PayEdge, you can also avoid payment bottlenecks by combining funds from multiple sources (such as bank accounts and credit cards) into a single payment order. This way, you don’t have to wait for sufficient funds in a single account to make a payment. You can also smooth out cash flow disruptions by paying vendors with a Visa or Mastercard credit card, even if they don’t accept cards.

These perks can also help you pay your vendors and suppliers in a timely manner with the potential for payment discounts. At the very least, these features can help you avoid late fees—while keeping your vendors and suppliers satisfied.

3: Out of Sync Communication

Problem

While it’s great to divide and conquer, individual roles and responsibilities throughout your accounts payable process can lead to siloed working. If that siloed working lacks consistent, diligent communication, it could lead to AP issues such as:

• Late payments: If an invoice contains incorrect or unclear information, or it cannot be matched to the correct purchase order, it can be challenging to clear up the confusion (think emails, last-minute “pings” and telephone tag).
• Workflow bottlenecks: If an approver misses your email or forgets a conversation you had in passing, they might not be aware that the invoice is stuck.
• Vendor confusion: On top of internal communication, it’s important to keep your vendors and suppliers updated on their payment status. If payment has been made, has your vendor been notified? If payment is delayed, have you sent them an update?

Keep in mind that these challenges can also increase as your company scales and adds more team members to the mix.

Solution

Keep everyone on the same page with a centralized AP automation platform like RBC PayEdge, which allows you to:

• Give all team members an up-to-date picture of a payment’s progress and status
• Schedule payments ahead of time
• Send automatic payment remittance details to your vendors and suppliers
• Allow multiple approvers, which creates a digital footprint for all users, allowing you to easily run reports, audits and more
• Track user and vendor data, especially as your company scales

4: Invoice Mismatches

Problem

The AP process requires a lot of invoice matching. Two common examples include:

• Matching an invoice to the purchase order (PO)
• Matching a completed payment to the accounting record (also known as payment reconciliation)

If you’re juggling hundreds of invoices, this process can get complicated, and a mismatch can leave your payable process vulnerable to delays, audit issues, fraudulent activities and plenty of other headaches.

Solution

AP automation allows you to import invoices and match them to the correct purchase order (PO). By integrating with accounting software tools like Sage, QuickBooks Online and Xero, RBC PayEdge aids in reconciling your accounting records once payment has been issued. On top of this, AP automation software helps by flagging issues and automating communications between you and your vendors or suppliers to relay mismatches and proactively prevent delays.

5: Sneaky Duplicate Invoices

Problem

Speaking of matching, with a manual AP process, it can be challenging to uncover duplicate invoices. This can lead to double payments, processing delays, tedious back-and-forth conversations and late payments.

Solution

AP automation platforms like RBC PayEdge seamlessly integrate with accounting software tools to automatically import your invoices and find duplicates. This way, you can clear up any confusion early in the payable process to avoid a cascade of related issues.

6: Internal and External Fraud Risk

Problem

With so many invoices, complex steps and people involved in the AP process, it’s easy to experience unsteady internal and external controls. This can open the door to fraudulent activities, such as cheque tampering, billing schemes, vendor impersonation and email scams.

Solution

While RBC PayEdge can’t help you mitigate all types of payment fraud, it allows you to strengthen your internal and external controls and detect some red flags as early as possible through the features below.

• High security standards: RBC PayEdge is connected to existing banking infrastructure and held to the highest financial security standards¹.
• Direct payments: Complete all payments directly from your chosen funding source(s) to your suppliers’ bank accounts using RBC PayEdge.
• Enhanced encryption: RBC PayEdge uses enhanced encryption to exceed industry-standard payment procedures to eliminate exposure of sensitive data.
• Roles and privileges: You can assign roles, privileges and approval rules for each user, and the platform’s digital interface provides transparent user trails.

In general, AP automation software reduces opportunities for interference, making it more secure than a manual workflow for your payable process.

7: Payment Limitations

Problem

As you work with new vendors and suppliers, you might find that some only accept paper cheques, and others accept every payment method except credit cards. This can feel limiting, especially if you’re trying to:

• Cut down on printing and postage expenses
• Smooth out cash flow gaps with a credit card
• Make the most of your business credit card rewards and incentives

On top of this, you might face expensive payment fees and currency conversion headaches when paying your international vendors, which can be frustrating and costly.

Solution

Accounts payable automation with RBC PayEdge allows you to:

• Send digital and cheque payments from the source account(s) of your choosing
• Pay vendors via Visa or Mastercard credit cards, whether they accept them or not
• Know your cost for global payments²

8: High Costs, in More Than One Way

Problem

It’s no secret that the average cost to process an invoice manually is usually much higher than with AP automation. These long-term savings often motivate companies to switch to an automated payable process.

To set the scene, here are a few common costs associated with a manual payable process.

• Labour hours: Not only do tedious administrative tasks cost precious dollars, but they also keep your employees from doing higher-value work that propels your business forward.
• Late fees: When mistakes, bottlenecks and insufficient funds turn into late payments, vendor late fees can increase your average invoice processing cost.
• Paper cheques: If you’re working with several vendors who prefer cheque payments, the cost of printing and mailing can add up.
• International payment fees: Without an AP automation tool that clearly outlines international payment fees, these fees can be unpredictable and costly.
• Regulatory fines: Mistakes and messy audit trails can lead to compliance issues and penalties from various regulatory agencies.

Solution

You can cut down on these costs with help from accounts payable software like RBC PayEdge, which allows you to:

• Automate manual administrative tasks to reduce labour hours, mistakes and processing delays, which can help to minimize consequential late fees and regulatory fines
• Generate cheques from the digital platform for vendors who only accept cheque payments
• Combine funds from multiple sources to avoid delays, overdrafts and late fees
• Pay via Visa or Mastercard credit card whether the vendor accepts them or not, so you can smooth out cash flow and maximize your card benefits
• Know exactly what international payment fees you’ll pay upfront² based on your pricing package

9: Poor Vendor Management

Problem

We’ve mentioned that a manual accounts payable process can strain vendor and supplier relationships for many reasons—and one big culprit is poor vendor management. This might look like:

• Double or missed payments
• Back-and-forth correspondence about errors
• Inaccurate data entry
• Lack of communication and remittance information
• Slow processing speeds
• Missing invoice due dates, project deadlines or contract renewal dates

It can also be as simple as focusing too much on one vendor while accidentally neglecting the others.

Solution

Improve your vendor management processes with AP automation, which can help you:

• Keep track of project, invoice and contract deadlines
• Pay vendors faster by automating manual processes, streamlining approvals and combining funds from various sources
• Proactively manage data surrounding invoices, vendors and suppliers instead of waiting for vendors to start conversations and/or corrections
• Send automatic remittance to let vendors know when payment has been issued

10: Weak Visibility and Reporting

Problem

Visibility and reporting are extremely important throughout the accounts payable process. Whether you’re accessing important invoice data, compiling reports to present to your teams and stakeholders or taking part in a third-party audit, it’s essential to ensure your AP records are accurate and accessible.

A manual, paper-based payable process doesn’t always give you a complete, real-time view of your company’s financial picture. Relying on paper files, human memory and manual inputs can lead to data inconsistencies, inaccuracies and more. This makes it hard to:

• Know the status of every invoice
• Stay on top of cash flow management
• Give your vendors an update when they ask for one
• Facilitate internal and external audits
• Accurately analyze your company’s current financial health

Solution

By digitizing your payable workflow, AP software integrates and centralizes data surrounding invoices, payments, vendors, suppliers, user actions and timestamps. These capabilities make it easier for you and your team to track progress, identify errors, compile accurate real-time reports, find bottlenecks and conduct internal and external audits.

Frequently Asked Questions