Accounts Payable Automation Software: The Risks Of Forgoing Adoption
Automatic Invoice Processing
With todays dynamic business climate, the need to maximize efficiency, manage compliance, and reduce costs is more keenly felt than ever before. Accounts payable automation software is one of the most effective means of meeting those objectives, by streamlining the payment process and providing centralized platform for the accurate recording of financial records. Yet, alarmingly, many organizations are still resisting adoption of this valuable technology, carrying with them substantial risks.
The increased dependencies on digital payments and electronic transactions mean that traditional slow and manually-reliant accounts payable processes can quickly become obsolete. Having an automated system in place can enable payment to be more accurately and regularly processed and result in better relationships with vendors, improved communication between departments, and greater financial control.
Furthermore, automated systems can help to automate reconciliations, facilitate compliance and enable higher levels of security and auditability. The ability to review payment histories, payment status and vendors? payment patterns in real-time can help organizations to save considerable amount of time, resources, and effort that would have otherwise been spent manually verifying payments across different ledgers and systems.
One of the greatest risks posed by not implementing accounts payable automation software is an inability to guarantee that vendor payments are made on time. Late payments can lead to huge losses due to penalty charges and reduced vendor loyalty, as well as negative cash-flow issues. Insufficient automation is also prone to iatrogenic errors. Human errors are inevitable in manual processing, but automated systems ensure accuracy and validations that prevent incorrect payments being made.
Another key risk is increased risk of fraud. While automated payments can help to reduce the risk of fraud, manual processing increases the possibility of both fraudulent and legitimate payments being missed, missed payments going undetected and incorrect payments being allowed to go through. Automation helps to create transparency in the payment process, which can significantly reduce the risk of fraudulent activity.
Having system in place to provide accurate, up-to-date financial records is another risk posed by not leveraging accounts payable automation software. Inaccurate financial records can easily lead to restrictive audit processes, potentially resulting in significant penalties. Additionally, it could also lead to inefficient payments and prolonged payment processing cycle, resulting in lack of visibility, control, and ultimately lack of profitability.
In short, not utilizing accounts payable automation software carries huge variety of risks for organizations. From insufficient auditor protection, heightened risk of fraud, and poor vendor relationships, to increased process costs and sheer inefficiency, the risks posed by forgoing adoption are integral for financial executives to recognize and understand. If organizations hope to remain competitive in the digital age, it is becoming increasingly imperative to invest in automated accounts payable systems, to guarantee timely and accurate payments and maintain control over financial decisions.
