Does this sound familiar to you? You get an invoice from a vendor. It gets filed away for payment. Your team has to determine what the vendor’s preferred payment is and then submit an ACH payment request or worst of all, cut a physical check. This might not seem like that big of a deal, but as your business grows and you have to do this process thousands of times per year, the hours and costs start adding up.

In an effort to find ways to make this process more efficient, you should evaluate each step to determine how long each step takes and if there are ways to improve those slower processes, either with automation or some other means.

At the same time, you’ll want to evaluate the cost of each step and see if there are ways to reduce costs without impacting the quality or speed of the process or the experience for your vendors or customers. As accountants, we should be good stewards of the company’s money and lead by example when it comes to fiscal responsibility.

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Consider this familiar scenario. One of the easiest costs to eliminate are transaction costs. When you use an ACH payment or cut a physical check there are costs ranging from .60 cents to $1.50 for every payment, but if you switch to a virtual card, those costs can be eliminated. For businesses that process 1,000 invoices a month that can be a savings of $18,000 annually.

That savings increases significantly when you start automating payment processing, which reduces much of the labor cost associated with accounts payable. When you’re able to eliminate transaction fees and labor costs, you’ll be paying just a fraction of the $15 per invoice described above. In fact, research has found that through automation and the elimination of fees, businesses can get their invoice processing costs down to as low as $2.90 per invoice.

Streamlining accounts payable workflows gives you greater control of cash flow and payment standard operating procedures. In the world we live in with higher interest rates, systematically holding cash can pay real dividends to your business. Additionally, automation helps create workload scalability. For example, if an AP clerk utilizing manual processes can manage 10 properties, but with automation can conservatively manage 15, and you manage 60 properties, you just saved yourself two full time AP positions all while improving operational efficiency.

Limiting fraud in the AP process

When it comes to preventing fraud in the AP process, there is good news. According to the 2023 AFP Payments Fraud and Control Survey Report, efforts being made to mitigate fraud are working. Since its peak in 2018 when 82% of organizations reported they were victims of either attempted payments fraud or actual attacks, that number has steadily declined. The most current data from 2022 shows that just 65% of organizations were victims of payment fraud attacks/attempts.

That doesn’t mean bad actors have given up. They’ve started targeting emerging payment methods. While checks and ACH debits and credits remain high on the list of targets, corporate credit cards, virtual cards, and mobile wallets each saw an increase in fraudulent activity from 2021 to 2022.

One of the primary forms of attack is the Business Email Compromise (BEC), which is “a type of cybercrime where the scammer uses email to trick someone into sending money or divulging confidential company info.” More than seventy percent of all organizations experienced a BEC attack in 2022. Accounts Payable (AP) departments are most susceptible to BEC fraud, 58 percent of respondents report that their AP department was targeted by email scams.

These scams are often perpetrated by individuals outside of your organization using sophisticated phishing and spoofing techniques, so be sure to have the right tools and training in place so members of your team know what to look for when processing payments. Beyond that, businesses should have guardrails in place to verify and vet vendors before issuing payments to them. One way to reduce and mitigate fraud is by incorporating automated processes that will act as a first line of defense against potential fraud.

Learn more

Learn how to drive more efficiencies in your properties’ accounts payable process, download our latest ebook, Automation is key for an efficient AP process today.