Risk Of Not Using Software For Accounts Payable
BASICS OF ACCOUNTS PAYABLE
Analysis conducted from the C-Suite perspective reveals that not using software for accounts payable comes with manifold risks that negatively impact the profitability of an organization. These risks diminishes the streamlines of procedures related to invoice processing and payments and increase the administrative costs.
Organizations suffering from non-compatibility of accounts payable software with their systems have to manually enter data in the software, leading to value subtraction in the form of overtime payments, additional human resources recruitment costs, etc., coupled with time-consuming processes and increased chances of human errors. Further, if the accounts payable data is stored in centralized electronic format, the risk of data breaches and fraudulent activities is reduced, however, if the data is stored manually, no such privileges are enjoyed. Therefore, the aptitude of auditing and analyzing the accounts payable department is made more difficult, potentially affixing higher financial liabilities.
Organizations operating in globalized business environment and transacting in multiple currencies will encounter serious difficulty reconcile exchange rate fluctuation related risks. In order to remain competitive, companies procure goods in bulk and rationalize the costs, however, if invoices are not processed in real time, payment delay may lead to non-availability of commodities or an escalating price traction. Furthermore, payments with late fees are drain on the liquidity of an organization.
The use of software for accounts payable can reduce these risks and offers ample degree of transparency into the data. Such move is exclusively beneficial since the management can access real-time reports on expenses. Automated systems can identify any anomalies, duplicate payments, and other discrepancies associated with invoices. With flexible software solution, organizations can avert the risk of lags and bottlenecks within their accounts payable department.
Considering that accounts payable activities often involve complex information, human capital is inadequately equipped to process it, in comparison to automated software solutions. pertinent aspect within accounts payable is the need to analyze performance forecast capabilities along with the outcome of scenarios. This entails certain level of accuracy, thus, only sophisticated software solutions can excel in as such considerations.
Finance executives should, therefore, invest in an advanced software solution that seamlessly integrates with their existing systems and offers comprehensive set of protocols for enabling advanced fraud detection, tracking vendor performance, analysis of dispute resolutions, and compliance adherence. Undoubtedly, the benefits far exceed the cost of procurement of such software.
