By Sharon Nouh (pictured), Founder & CEO, ProSpend

Accounts payable isn’t flashy, however inefficient AP is silently bleeding cash from your corporation day by day. Many finance groups settle for sluggish approvals as regular, however handbook processes quietly drain time, cash and efficiency.

In Prospend’s new report, Cease the AP Leak, Duplicate Funds, Gradual Approvals and What Prime CFOs Do Subsequent, we spoke to a number of Australian-based finance leaders throughout industries to uncover simply how pricey handbook AP might be; their insights had been correct and even just a little alarming. On this first excerpt article, we share a few of their insights to disclose how outdated workflows create dangers that stretch far past processing delays, suppose fraud, misplaced belief, and missed alternatives.

Based on the Australian Taxation Workplace, a paper bill can price thrice extra to course of than an digital one ($27–$30 vs <$10).. But, shockingly, many finance groups proceed to depend on clunky e-mail approvals, spreadsheet monitoring and handbook information entry.

Handbook or paper-based AP processes expose organisations to actual and rising dangers. The hidden prices embrace sluggish, labour-intensive processing the place invoices take weeks to approve, frequent errors and duplicates from handbook information entry, restricted visibility into payables and money stream, missed early fee reductions, and compliance and fraud dangers from messy audit trails. Each additional day an bill sits unapproved is a day money stream and credibility takes successful.

These prices aren’t simply financial, in addition they squander potential. As Lou Krstevski, CFO of Sydney-based monetary providers agency BAC Consulting & Advisory, factors out.

“The price of outdated handbook AP programs and processes go far past workers time. In addition they forestall an organisation from reallocating expertise to extra value-added duties. Different prices embrace the injury to company goodwill {and professional} picture when there may be fixed leakage by duplicates, errors, unchecked financial institution information,” Krstevski mentioned.

In different phrases, handbook AP doesn’t simply waste time, it steals alternatives out of your workforce and tarnishes your organization’s fame with each error.

Such points injury relationships with suppliers, monetary lenders, auditors, the tax workplace and regulators. This lack of belief is compounded by rising cybersecurity and bill fraud dangers. Based on the Australian Cyber Safety Centre’s newest Annual Cyber Menace Report, BEC scams price Australian organisations practically $84 million within the 2023-24 monetary 12 months.

In high-stakes industries reminiscent of building, AP delays can actually cease work. Maximilian Zielinski, CFO of Issue Corp, shares simply how dangerous handbook AP might be.

“Errors or delays can maintain up tasks, create disputes, or pressure provider belief. In an business the place money stream is the whole lot, these inefficiencies carry actual monetary weight,” Zielinski mentioned.

When a mission stalls because of a fee concern, it’s not simply an inconvenience, it’s misplaced income and damaged belief that may take months to rebuild.

Cascading right into a flood of inaccurate information

Handbook bill processing just isn’t solely sluggish ‘within the second’, it triggers a cascade of downstream errors that may price much more to repair. Retief Lampen, Chief Monetary Officer at iion, explains that tiny typos or inconsistencies (like an additional area or a wrongly keyed vendor ID) can snowball into lacking entries and duplicate funds.

Morgan Wilson, Founder and Director of Brisbane-based agency Creditte, calls the detective work of fixing mismatches a ruinous use of sources.

“Groups spend hours matching invoices to POs and receipts, typically in spreadsheets. Each handoff is an opportunity for an error to creep in, and fixing errors takes twice so long as stopping them,” Wilson mentioned.

Many of those points stem from inaccurate bill information. Staggeringly, of the 1.2 billion invoices exchanged in Australia every year, 1 in 5 is distributed to the unsuitable individual and practically 1 in 3 comprises incorrect info, based on the Australian Small Enterprise and Household Enterprise Ombudsman.

Emma Fisher of Sydney-based Evolve Consultancy underscores that unhealthy bill information undermines the whole lot.

“If bill information isn’t correct, the financials constructed on prime of it will probably’t be trusted,” Fisher mentioned.

Briefly, unhealthy information = unhealthy choices. If invoices aren’t checked correctly, budgets and forecasts turn into fantastical.

Elevated strain on suppliers

Provider endurance is carrying skinny. In simply the final couple of years, ‘acceptable’ fee phrases have shrunk dramatically. Two years in the past, suppliers tolerated month-to-month fee batches.  At the moment they need real-time updates on fee standing and on the spot affirmation.

These expectations create explicit strain in industries like building, the place fee delays shortly cascade down the availability chain. Suppliers and subcontractors want quicker fee cycles and clearer communication about once they’ll obtain funds. If these requirements usually are not met, anticipate suppliers to escalate by aggressively chasing funds, withholding deliveries and even terminating contracts.

For organisations nonetheless counting on handbook AP processes, assembly these calls for turns into more and more tough. However the upside of streamlining approvals is substantial.

As Lou Krstevski observes, dashing up approvals doesn’t simply preserve suppliers joyful, it truly strengthens your bargaining energy.

“The flexibility to precisely scale back approval instances and fee offers you the leverage to renegotiate higher provider phrases,” Krstevski mentioned.

“Correct reporting of approvals and payables will enhance confidence in cashflow forecasting, and the workforce can deal with extra value-add duties or be moved to particular tasks that add worth.”

While you pay quicker and error-free, you acquire leverage to demand early-payment reductions or higher phrases. Actual-time, correct AP information means no extra guessing in cashflow forecasting, management can belief the numbers and make choices quicker.

The query isn’t whether or not your handbook AP course of will fail, it’s when. The true price goes properly past processing inefficiencies. It damages relationships, exposes organisations to fraud, undermines monetary reporting and prevents finance groups from contributing strategically.

By sticking with the established order, you’re not simply tolerating a sluggish course of, you’re risking your money, your credibility, and your organization’s future. Every single day you wait is one other day of misplaced cash and misplaced alternative. It’s time to behave.

This text is only a preview of the findings in our new report, Cease the AP Leak. Obtain the total report back to see what prime CFOs are doing subsequent to repair AP and how one can observe their lead.”