Exceptions are one of many common (and solvable) problems that AP teams face on a daily basis—and they cost both time and money. Financial costs happen when AP teams execute incorrect payment amounts, duplicate payments, payments for invalid invoices, and other errors.
These numerical costs are trackable line-items—unlike time costs. AP team members waste precious hours manually chasing down invoice, purchase order, and transaction details. When you think about what handling exceptions entails—comparing, correcting, oftentimes calling or emailing suppliers—you’re looking at an activity that can take up a serious portion of your day as an AP practitioner.
The fact that AP works with numbers doesn’t mean they are immune to making all-too-human mistakes. Although problem invoices on their own create lots of pain points for AP teams, there are all kinds of errors that can happen in both the invoicing and payment process.
This list of exceptions only covers the tip of the iceberg:
Organizations are constantly taking steps to avoid the pain points that come with exceptions and payment errors. For example, many have already upgraded from using Excel to track procurement, a method that depends on manual data entry, which almost always entails errors. Other organizations also seek to ensure accuracy by integrating three-way matching into their processes as a best practice.
But in fact, any piece of paper required at any step in your invoice or payment process can go missing—and that can create the low-level chaos of exceptions that AP teams deal with all the time. You can take incremental steps like digitizing your invoice process, or implementing technology that integrates your purchase order system with your accounting system. But does that make a real, long-term difference?
The effect of exceptions and errors in AP is a significant reason for increasing adoption of automated payments. AP teams that depend on paper-based payments end up responding slowly to erroneous payment issues, which itself costs money.
AP’s primary goal should be to both ensure quick payment processing and minimize exceptions. Automation has been proven to help companies reduce processing time by up to 70 percent across the board, and solutions that include services like proactive payment follow-up help detect and mitigate payment errors early.
After implementing an automated payment solution, your AP team could deploy the hours previously spent handling exceptions on value-added tasks like negotiating better payment terms, ensuing on-time payments to enhance supplier relationships, pursuing early payments so you can capture discounts—or even optimizing an inefficient invoice process.
In short, although automating your payments won’t eliminate all exceptions, it can reduce them significantly, along with the time and cost it takes to manage them.