14 reasons why accounts payable is so gnarly and in need of repair.

Although an approval process is typically implemented to improve control, language-based policies backed by manual routing often lead to confusion around who needs to approve what. And, of course, it’s all further complicated when an approver is away from work. As a result, AP has to field a lot of questions regarding approvals, and track down missing evidence.

Slow approval processes aren’t just frustrating, they can also impact business operations. When approvals are slow or even missing, payments can be delayed, resulting in poor vendor relationships. Employees can experience delays in getting their work done while they wait for approval. Or, they can make a purchase only to find out it isn’t reimbursable.

When an employee makes a purchase, the terms must be clearly communicated to the AP team, but often that information gets lost because the communication avenues aren’t set in place, so an invoice arrives in Accounting’s inbox with no context, few details, and no indication of who to ask for clarification.

Miscategorizing an expense is easy to do, particularly in companies with complex general ledgers. When a miscategorized expense is caught before the monthly close, it can be corrected manually, which could potentially slow down the monthly close. But when it’s not caught until after the close, budgeting could be affected. If material enough, a miscategorization could require a restatement, which is time-consuming and requires additional reporting and explanations, and also undermines confidence in the team and their ability to close the books correctly.

Receipts are required by the IRS as proof of purchase, and it’s necessary to produce them during an audit. But they’re also notoriously easy to misplace, or even forget to ask for. It falls on AP to track them down and to ensure the amounts on each receipt reconcile with credit card statements and reimbursement requests.

Plus, all other documentation must be attached to a transaction record, including spend approvals. Sometimes those approvals are buried in an email chain, sometimes they are just verbal agreements, but, once again, it falls on AP to ensure the approval record is easily accessible and matches the transaction amount.

AP also needs to secure W-9s in order to track any payments to vendors that must be reported to the IRS through required 1099 reporting.

Everything, of course, needs to get into the GL. With a siloed AP tech stack, team members have to perform manual data entry or messy CSV transfers in order to update the GL to close the books at month end.

The visibility and control afforded by purchase orders ease some AP pain points. But without the right processes in place, POs can be one of the gnarliest AP functions. According to the Aberdeen group, up to 20% of invoices contain errors, and it falls on AP to resolve those. Consider this all-too typical day:

• An invoice comes in, but there doesn’t seem to be a matching purchase order.
• An overdue notice arrives, but the team can’t find the original invoice.
• An invoice for a pricey SaaS product arrives. The team matches the purchase order, but it’s unclear who approved such an expensive purchase.
• An invoice arrives, and the team matches the purchase order and processes the payment — but the goods haven’t been received yet.

Everyone hates doing their expenses, and accounting teams often find that processing them is difficult. One survey found that over half of surveyed business travelers would rather do their taxes than fill out an expense reimbursement form. The entire process is rife with problems for AP to solve. A high percentage of reimbursement requests contain errors, which can slow down the reimbursement process. As a result, according to PYMNTs, about 40% of employees who use their own money for business have had cash flow problems because of this, which can lead to unnecessary tension with AP.

Credit cards are an easy payment method for employees, but they can add a lot of extra work for AP. When a physical card is passed around among employees, it can become impossible to track. (We’ve talked to controllers who simply took away all corporate cards to try to rein this in.) Plus, cards can get lost or stolen, resulting in extra work canceling the cards and updating any recurring charges on the missing card. Recurring charges associated with specific employees must be canceled when employees leave.

Credit card spending must also be reconciled for each card — a time-consuming manual process when multiple cards are used.

An audit can be a productive review of policies and procedures but, without the right processes in place, it can be extremely time-consuming to gather all of the required documentation.

Amortizations and accruals must be properly booked, but complex schedules are time-consuming, particularly when done manually on spreadsheets.

Timely, accurate payments not only make vendors happy, they can also lead to lower costs through rewards like early payment discounts. A variety of factors that slow down payments are outside of AP’s control: sometimes the vendor hasn’t updated their payment procedures, sometimes employees are slow to submit requests, and sometimes slow approval procedures create delays.

Leadership, budget owners, and department heads all need up-to-date data to monitor a company’s financial status and make budgetary adjustments as needed. But, when financials aren’t updated in real time, the AP team has to produce ad hoc reports, often with little notice.