Risks Of Not Automating Accounts Payable
DEFINE PROCURE TO PAY PROCESS
There is no questioning the potential benefits of automating accounts payable. Streamlining processes, ensuring compliance, reducing manual labor, and saving cost and time are emphasized by executives and operations teams alike. At high-level, automated accounts payable processes are cost-effective and reliable solution.
Understanding the unique risks associated with not having proper procure to pay process in place is necessary part of assessing if such solution suits the business? needs, however. Without such system, organizations expose themselves to the potential fraud, errors, and compliance issues that can arise from manual processing.
It is essential to note the potential many potential gaps of manual procure to pay (P2P) processing, in order for decision-makers to be informed of the risks of continuing without automation software.
Fraud
P2P processes are prone to run into irregularities because of their immense number of interactions between different personnel and departments. When manual, the probability of fraudulent transaction can occur by an employee, customer, or supplier.
One example is the ?perpetrator-initiated? fraud, in which person close to the process uses their access to funnel money out of the company. Having standard system in place, such as one with central control and audit logs, gives stakeholders more comprehensive view of the activities taking place, allowing for ?red flags? to be noticed and potential problems addressed quickly.
Errors
Errors in manual-P2P tend to be abundant and harder to trace, due to the manual operation of the process. Duplicate payments, disproportioned amounts, incorrect client accounts and bank statements, lack of timely authorization, and general lack of visibility are some of the common issues that can occur.
But with an automated system, companies can create conditions where the transactional details and data collected is free from errors. With audit trails and automated process flow, companies can streamline and accelerate the paperwork, while increasing accuracy by using data recognition technology to extract and analyze relevant information.
Compliance Issues
The proper handling of an accounts payable process requires strict compliancefrom companies, in order to remain in good standing with regulators and comply to tax codes. Without automation software, it can be difficult to obtain accurate records in order to remain compliant. Automating the system allows company to easily capture, store, and access the data necessary for both financial and regulatory compliance.
Also, having strong internal controls in place helps to drive the routine and ensure the smooth functioning of the system. This includes workflow, segregation of duties, approvals, authorizations, and reviews.
In short, automation is solution that helps companies mitigate risk, by providing visibility and insight into the points of failure in their procure to pay processes. From fraud prevention and error reduction, to ensuring compliance with finance regulations, it is essential for companies to reduce their risk and employ an automated approach to their accounts payable.
