No company can afford to lose customers or forego revenue because of errors and inefficiencies, but that’s exactly what’s happening with inaccurate payments.
It’s estimated that failed payments, alone, cost the global economy $118.5 billion in fees, labor and lost business in 2020 according to a study by Accuity. In our current state of economic turmoil, a loss like that is especially difficult to bear.
Today, sky-high inflation, a looming recession, and other macro-economic factors out of our control, are putting intense pressure on organizations to keep a watchful eye on budgets and better manage their cash flow. Business continuity depends on it.
One way business leaders can future proof is to identify and rectify costly payment mistakes before they happen.
Here we examine how businesses can save thousands of dollars per month by identifying the most prevalent payment mistakes within their organizations and nipping them in the bud.
We also look at how automating payment processes with artificial intelligence (AI) and machine learning can help prevent inaccurate payments and create efficiencies that are especially valuable during these challenging economic times.
What’s causing inaccurate payments in your organization?
There’s a gamut of payment mistakes that could be plaguing your organization, including outdated information in your vendor master file (VMF), duplicate payments, data entry miscues, and the bypassing of 2-way and 3-way matching.
It’s easy for information in a VMF to be typed incorrectly or become obsolete as contact names, phone numbers, addresses, and terms change frequently, and companies routinely rely on scores of vendors. The same goes for data entry errors, such as transposing numbers, misplacing decimal points or keying info into the wrong field. Humans make mistakes.
But the resulting incorrect vendor data isn’t just a nuisance. It can lead to paying the wrong vendor or paying the same vendor twice, which can damage vendor relationships when you need them most and result in less money in hand while dealing with higher costs of doing business.
Two-way and three-way matching processes, which ensure that invoice and purchase order amounts align (as well as sales receipt data, in the case of three-way matching), can help prevent many payment errors by catching oversights. However, companies that depend on manual processes for handling invoices and paying bills often operate without them, leaving them more vulnerable to payment errors.
Heightening control amidst economic turmoil
Once you weed out the root cause of payment mistakes that could be costing your organization precious resources, you need best practices and processes in place to help fight against future inaccuracies and errors.
Start by cleaning up your VMF. Verify that vendor information is updated, remove duplicates and inactive vendors, and add any missing information like new contacts’ emails and phone numbers. It’s also a good idea to standardize formatting and put policies in place to ensure proper upkeep and fight against fraud that can result from unscrupulous use of the VMF by employees and vendors.
The next step is to modernize error-prone AP processes with automation. Automated AP software replaces manual processes like data entry, eliminating errors that can lead to inaccurate payments that threaten important business relationships and the bottom line.
These solutions ensure payment accuracy by enabling organizations to create a standardized vendor setup process with internal controls like separation of duties. Machine learning, a type of AI used in AP automation systems, allows for continuous monitoring of invoice and payment processes to better confirm accuracy and fight against fraudulent payments by detecting fake invoices and other types of fraud before sending inaccurate payments.
Automating is especially valuable during times of economic upheaval and uncertainty because of its ability to drive efficiency, heighten security and provide enhanced visibility into the state of the business. With AP automation, business leaders can easily monitor funds coming in and going out, analyze their spending and make quick changes to adjust to new demands or market fluctuations.
There’s never been a better time to invest in payment efficiencies
While economic uncertainty adds to the stress of doing business, it’s also a driver for improvements that can create proficiencies, strengthen important relationships, and empower organizations to better manage risks like payment inaccuracies.
Investing in technologies including AI and machine learning can empower your business to weather the current storm and emerge stronger and better prepared for the future.
