Common accounts payable mistakes and what you can do to prevent them
In any profession, no worker intends to make a mistake during their day job.
But, even a small error can be costly for a business when it comes to the accounts payable function.
Unfortunately, an AP professional’s role is open to human error, with manual data entry, missing items and duplications putting a company at risk of financial leakage.
At Westgate Moore, we recently researched the types of mistakes made within the accounts payable function, with 92% of financial experts suggesting that duplicate payments and overpayments were still common within the industry.
So, what are the most common accounts payable mistakes, and what can you, as a business or AP, do to prevent them from happening?
Here’s our list of the top five accounts payable mistakes and what you can do to ensure they don’t make an impact on your business.
It was recently revealed that nearly two-thirds of finance professionals had received duplicate invoices in the UK.
This statistic just goes to show how prevalent replicated payments are within AP teams.
And replicated payments can be due to several different reasons: data entry errors, supplier inaccuracies, invoice distribution, and multiple source documents.
With AP teams receiving potentially hundreds of invoices each week, it’s no surprise that their busy workloads and an element of human error will cause duplicate payments to occur.
Suppliers who use different formats to share their invoices; for example, if a client shares an invoice via email, by post and fax, this could mean a business receives the same document multiple times, leading to duplicate payments.
If you don’t have a suitable reconciliation process or preventative software in place, then the chances are any duplicate invoices may not be flagged by your AP team. This inaccuracy could potentially end up costing your business significantly in the long run.
Of course, manually logging invoices would allow AP professionals to stay on top of the documents they receive, but this is an incredibly time-consuming task that is, of course, very open to human error.
And with the utilisation of technology within businesses today, there are now ‘cloud based’ solutions available that can notify accounts payable teams of any duplicate invoices or payments.
The introduction of these electronic systems has allowed AP’s to stay on top of invoices by flagging any missing items or discrepancies, helping to save a business money in the long run.
Leaving accounts open to fraud
The accounts payable department is a particular part of a business that is open to fraudulent activity.
In some cases, fraudulent AP professionals using traditional accounting practices can take advantage of gaps in accounts payable processes, which allows money to be embezzled quite easily without a trace.
Most businesses should ensure that they utilise internal controls, particularly segregation of duties, to ensure that there is more than one team member responsible for different AP function areas.
By ensuring that multiple employees look after different parts of the process, there is less chance that fraudulent activity can occur without a more conscientious member of staff noticing.
It’s also crucial that AP professionals are required to have a paper trail of invoices and purchase orders that are required, to ensure that businesses can quickly and easily see the financial picture of the company at a snapshot.
At Westgate Moore, we have many years of experience helping businesses rectify their mistakes within their accounts payable function, helping to mitigate the financial impact of any of these AP errors.
As specialists in audit recovery, we can help recover any lost revenue caused by inaccuracies made through the AP process, investigating mispayments and overpayments to help you recuperate any cash that your business is owed.
With your accounts payable team already strapped for time, we can work as an extension of your AP function to explore any discrepancies, freeing up valuable hours for your employees and recovering your hard-earned money.
If you’d like to speak with a profit recovery specialist, get in touch with the team here at Westgate Moore on 0121 3256920 or email us at email@example.com, and we will get back to you shortly.
19 March, 2021