Your AP – 3 places we know it hurts

Your AP – 3 places we know it hurts


Accounts payable.  It’s a necessary and everyday business practice.

For most businesses it follows a series of straight forward steps – receive invoice, enter invoice into payment system, review, approval and finally, payment.  But there are points in this process that at times can be painful.  Here’s three places we know it hurts with a few tips for identifying areas of improvement.

Processing Cost

Each step in the AP process incurs a cost, but entering an invoice is undoubtedly where the greatest cost lies.
A recent survey in the US shows that almost half of invoices still arrive as paper – not great news for the receiving business.  Whilst there is some good news in that this figure is set to drop over the next 2 years to less than 30%, it still represents significant cost.  Processing paper invoices also becomes more complicated for larger business receiving high volumes of invoices and also when there are multiple offices/sites required to forward invoices to a central processing point.

Some businesses will calculate a specific per invoice processing cost and take action to reduce this figure.  It may not be necessary to go to the effort of calculating this figure, but it is worth considering the invoice entry process and identify points where better processes or even technology could be implemented to reduce costs and time (more on that next).


There is nothing secret about the fact that the quicker an invoice is entered into the accounting system, the quicker the decision can be made about payment timelines.  Slow entry can prevent a business from paying invoices when it suits their own timelines and can land them with late payment penalties – not only a cost in itself but it can also damage the relationship with the supplier.  Don’t underestimate the power of good supplier relationships!  Slow entry is a missed opportunity for early payment discounts and is also a barrier to accurate liability reporting.  And if the process is manual, of course it is slow plus there is more opportunity for error – further valuable time can be wasted rectifying errors.  Transitioning to automated processes reduces the time taken to enter invoices but it also avoids errors in the first place.  Once an invoice is safely captured in the system, it still requires review and approval – this is a key area where emerging technologies are demonstrating improvement – streamlined processes, less time required and the creation of accountability.


Once the invoice is paid, there is still a requirement for storage with the option for retrieval, if required.  A paper-based process is going to require physical storage, so space and the storage container implies added cost.  Physical storage may not be ideal from a retrieval perspective, especially if storage is offsite.  Certainly electronic or cloud storage is an alternative and lower-priced solution with easy retrieval, but care is required to ensure the solution selected is suited to your short and longer term business needs.  A thriving business is based on decisions made with trustworthy information and reporting, so accessibility to an accurate picture of costs and liabilities is crucial.