Real solutions to the 5 most common accounts payable problems

Leading an accounts payable department isn’t easy.

First, there’s the high stakes. For most businesses, AP is the second largest expense after payroll. It’s also one of the largest targets for fraud, with purchasing, accounting, and finance fraud comprising approximately 24% of occupational fraud cases worldwide.

Next is the complexity and cost. AP professionals must navigate complicated workflows, manage ever-increasing invoice volumes, and control errors and bottlenecks to effectively manage cash flow and pay suppliers on time. 

Despite being mission-critical, accounts payable teams are often asked to do more with less. Striking a balance between keeping costs under control, addressing staff burnout, and meeting the growing demands to contribute to the bottom line can be taxing, even for the most experienced leaders.

Understanding the challenges facing AP teams is key to driving efficiency, mitigating risk, and bolstering the bottom line. While the problems are significant, they can be overcome. In this article, we reveal the top five accounts payable challenges and share how real-world AP teams have used best practices and financial automation to overcome them.

What are the most common accounts payable challenges facing businesses today?

In September 2023, Stampli and Probolsky Research surveyed 248 accounts payable leaders and professionals from organizations ranging in size from 25 to 15,000 employees. A key question identified the top five challenges faced by AP leaders and how they believed AP automation could address these issues.

Note: Respondents could choose more than one answer.

The main challenges identified were:

1. Improving invoice and payment processing accuracy (51%)
2. Improving data entry and processing speeds (46%)
3. Improved fraud detection (40%)
4. Cutting costs (38%)
5. Improving financial system efficiency (38%)

Let’s break out these challenges and explore how your business can solve them with accounts payable automation software.

Challenge 1: Improving invoice and payment processing accuracy

Invoice and payment errors can lead to missed, incorrect, or duplicate payments, causing financial losses and damaging vendor relationships. High error rates also tie up resources and slow processing time as clerks must investigate and correct invoice and payment discrepancies.

Despite the digitization of financial processes, including AP processing, many businesses still rely on error-prone manual tasks. According to the Stampli and Probolsky research survey, 20% of organizations rely on manual accounts payable processes. Most (63%) organizations have automated most of their AP processes; however, technical issues such as poor integration with ERP systems or inaccurate invoice capture require manual workarounds for complex tasks like GL coding, purchase order matching, and approval routing.

The cost of invoice errors

The cost of errors is significant. According to the Stampli and Probolsky Research survey, almost three-quarters (70%) of organizations report AP error rates of 5% or more. For example, if a company processes 10,000 invoices annually with a 5% error rate, its AP team must correct 500 invoice and payment processing errors every year. If we assume it takes an AP clerk an average of 2 hours to resolve an error, that’s 1,000 hours each year.

Accounts payable automation reduces errors and fraud

Automating AP processes reduces errors by eliminating manual processes like invoice capture and payment processing. However, many automation platforms don’t completely automate AP processes and require manual workarounds, limiting their effectiveness in reducing errors. For example, Tipalti customers complain that the platform’s outsourced OCR function doesn’t always pick up correct information, resulting in data entry errors. AP teams must enter data manually: “Sometimes PO numbers do not properly pick up from the OCR system. For example, the OCR might pick up ‘PO 18535’ instead of ‘18535’. This causes the AP team to have to manually link the PO, creating an extra step.”

Leading financial process automation platforms like Stampli are designed to provide exceptionally high invoice scanning and processing accuracy. For example, Stampli’s AI-powered platform uses machine learning to learn different invoice formats, understand complex invoices, and learn cost accounting rules to eliminate processing errors. Stampli also offers pre-built integrations that automatically sync AP data, communications, and documents with ERPs and accounting systems, eliminating manual data entry and streamlining payment processing.

Case Study: Eliminating paper-based invoice processing at Wolf Construction

West Des Moines-based Wolf Construction is a fast-growing company providing wood framing, trim carpentry, and roofing services from locations across the Midwest. Wolf had successfully digitized most of its construction operations to support its growth. However, it was still using manual paper-based accounts payable processes that had become a significant bottleneck and threatened to slow the whole company down.

Wolf had 25-45 major construction projects going on at any given time and was receiving paper invoices from hundreds of vendors and subcontractors. The process of manually entering and verifying each invoice was overwhelming Wolf’s back office. Mistakes were inevitable. Coding errors, payment discrepancies, and late payments created costly accounting errors. The chaotic process also left Wolf vulnerable to fraudulent invoices. Fixing the errors and fraud tied up employees who could have been focusing on higher-value tasks.

Stampli helped Wolf automate their AP workflows, bringing about a transformation that Wolf’s CEO calls “the end of drowning in paper.”

With Stampli, Wolf digitized its invoices and eliminated manual invoice processing. Invoices are now centrally stored and easily accessible to staff and approvers. Stampli’s automation features sped up invoice capture, coding, and data entry, and its platform integrated seamlessly with QuickBooks, Wolf’s ERP, to ensure AP data was accurate and consistent across the company. Wolf’s CEO Jon VanDis describes how Stampli has helped eliminate errors and prevent fraud:

“Stampli just does all the stuff we did manually before, except I have an electronic paper trail of all of it and it’s much easier access. If we didn’t have Stampli, we’d have to hire someone to work on invoices full-time. It saves us that much time.”

Challenge 2: Improving data entry and processing speeds

Slow processes create bottlenecks in the AP workflow, leading to late payments, missed opportunities for early payment discounts, late fees, and damage to vendor relationships. It can also negatively impact cash flow management by making it difficult to predict when the business will pay vendors.

Accounts payable automation improves invoice processing speeds and reduces days payable outstanding (DPO) by removing manual tasks, reducing errors, and automating approval routing. In the Stampli and Probolsky Research survey, 68% of organizations reported they were processing invoices within one week. The remaining 32% were taking one week or longer.

AP automation software eliminates slow manual processes and delays

Automation platforms speed up invoice processing by automating repetitive manual processes. For example, several platforms use OCR and AI technologies to reduce invoice capture time by automatically digitizing invoices, and capturing and entering invoice data. However, many platforms struggle to provide true end-to-end AP automation because they can’t automate complex processes or fully integrate with business systems. AI-powered platforms like Stampli are designed to automate complex processes like invoice coding, three-way matching, and dynamic approval routing. They automate the whole AP process to provide maximum efficiency.

Case study: Cork Howard automates AP and reduces paper use by 90%

Cork Howard is a boutique contractor based in Georgia. They provide high-end renovations for hospitals, universities, offices, hotels, and other large clients. As a fast-growing company with tight profit margins, Cork Howard needed to update their financial processes. Their current manual AP process was slow and didn’t provide the visibility the company required to manage costs. They needed a solution to streamline their existing processes and integrate with their legacy Sage 300 CRE ERP.

With Stampli, Cork Howard found the solution that met their needs. Stampli replaced their manual invoice processes by digitizing and centralizing invoices, giving staff the ability to match documents and approve invoices remotely. Stampli could also support the custom invoice fields Cork Howard needed to export data to Sage 300 CRE accurately. As a result, Cork Howard reduced paper processing by 90% and invoice processing time by 99%.

Cork Howard’s controller, Milissa Douglas, shares how Stampli has helped them expedite invoice processing: “We don’t have to keep paper copies. Everything is electronic. We don’t double copy stuff and lose invoices because it’s all in the system,” she said. “Best of all, the efficiency gains aren’t just felt in AP — our project managers in the field can instantly find the information they need for customer billing. Our gain is their gain.”

Challenge 3: Improved fraud detection

In its 2024 AFP Payments Fraud and Control Survey Report, the Association of Financial Professionals said payment fraud had increased dramatically in 2023. That year, 80% of companies reported they had been victimized by payment fraud attacks or attempts, a 15% increase from 2022. Under half (41%) partially recovered the money they lost.

AP automation is your best defense against fraud

Visibility and transparency are the best defense against fraud. In 2024, the Association of Certified Fraud Examiners reported that employee tips, when an employee notices and reports a discrepancy, are the most common way fraud cases are detected. The other top detection methods include internal audits, management review of transactions, and document examination. Unfortunately, manual AP processes are anything but transparent.

AP automation platforms provide real-time data reporting and analytics that let AP teams detect and investigate signs of fraudulent activity. Many platforms also record transactions, user actions, and communications, providing a complete audit trail that aids in detecting and preventing fraud.

Leading platforms offer enhanced anti-fraud features, such as restricting user roles, automated fraud detection, enforcing internal controls, and real-time expense and payment monitoring. Stampli provides enhanced AI-powered anti-fraud functionality such as automated three-way matching, unusual invoice alerts, and real-time payment monitoring and control via Stampli Card.

Case study: How Stampli helped PetLab catch a 33% invoice increase

Unusually large invoices are risky for AP teams. Without measures in place to detect and investigate anomalies, the team may unknowingly pay a fraudulent or incorrect invoice, leading to significant financial losses and extra stress as they try to repair the damage and recover the funds. To protect against this, AP teams must verify every transaction, a process which was especially stressful for PetLab Co.

PetLab provides supplements that help pet owners improve their pets’ quality of life by managing common health conditions. Their busy AP team didn’t have a practice in place for comparing current invoices against historical costs, preferring to review transactions at month-end. Unfortunately, this meant the team wouldn’t detect any unusually large invoices until they reviewed the month’s transactions. Investigating and addressing these anomalies was adding additional stress to an AP team already under pressure.

Stampli’s Unusual Invoice Alerts feature helps PetLab detect and investigate anomalies earlier, helping them detect fraud, avoid financial losses, and reduce stress on their AP team. Unusual Invoice Alerts automatically scans new invoices and compares them to historical billing patterns. If it finds a discrepancy, it sends an alert to the AP team so they can investigate.

George Koukoumpanis, Financial Controller at PetLab Co. describes how Unusual Invoice Alerts helps protect their cash flow from errors and fraud — including when a vendor unexpectedly increased its prices by 33%: “Stampli’s Unusual Invoice Alerts gets us ahead of the issues. This makes our month-end less frantic and gives us a better chance to protect our cash flow without putting pressure on our employees or our vendor relationships.”

Koukoumpanis goes on to say, “This feature saves us stress as much as it saves us money. The vendor sent a 33% increase while our CFO thought we were still in negotiations. The advance warning lets us address the issue without any month-end time pressure forcing either party into a corner.”

Challenge 4: Cutting costs

AP departments in growing businesses are often tasked with managing increasing workloads while keeping costs under control. In AP in 2023: Expectations, Technology, Opportunity, Stampli asked AP leaders how they expected AP department workloads to change. Most (80%) said they expected invoice volumes to grow, and just over half (53%) said they expected the complexity of invoices to increase. This presents a significant challenge for AP leaders who must balance the need to improve productivity while reducing labor costs.

AP automation reduces the cost of accounts payable processing

Automating manual AP processes is the best way to increase employee productivity. According to the APQC, companies using manual AP workflows process 6,082 invoices per FTE per year, while companies that fully automate their accounts payable can process almost four times as many at 23,333 invoices per FTE per year. Automation also indirectly reduces costs by increasing processing speeds (reducing late fees), reducing fraud and errors (reducing financial losses), and reducing paper storage costs.

The top AP automation platforms combine processing efficiency, real-time reporting, ERP integration, and scalability to maximize efficiency and improve employee productivity. As the leading AP automation platform, Stampli has an impressive track record of helping companies reduce the need for additional headcount, redeploy employees to higher-value tasks and identify and address process bottlenecks. Stampli is flexible and scalable to support business growth and seamlessly integrates with over 70 ERPs without the need for expensive rework or outside consultants.

Case study: Avid Acceptance scales up without adding AP headcount

Avid Acceptance is an auto finance company based in Salt Lake City that oversees 14,000 accounts in a portfolio worth $230 million. Auto financing is a highly cyclical sector, and only the most innovative companies successfully manage the ups and downs. Avid Acceptance has a unique approach to the challenge — leveraging accounts payable. With a 30-40% year-over-year growth rate, you could say their approach is paying off.

Avid Acceptance takes a strategic approach to AP management based on developing and optimizing three capabilities.

1. Proactively controlling cash flow: Avid Acceptance uses AP automation software analytics to understand when invoices are captured and coded. By analyzing invoice lifecycles, they identify opportunities to optimize cash flow by strategically controlling payment timing.
   
   “Stampli makes it easy to have complete visibility into when invoices come in and when they should be paid,” says Curtis Ash, CFO at Avid Acceptance. “We use analytics to understand when invoices are received and coded, and we carefully control when payments should be sent out.” 

2. Agile workforce management: AP automation software significantly increases employee productivity, helping Avid Acceptance avoid cyclical over- or under-hiring. During peaks, they can scale up the AP workload without adding headcount. During downturns, the increased employee productivity means they can redeploy employees to high-value tasks without impacting AP productivity.
   
   “We’ve typically grown 30-40% annually. Under these conditions, a manual AP process would be a bottleneck, requiring a proportional increase in personnel. But AP automation software like Stampli enables scalable growth without the need to increase headcount.”

3. Monitoring vendor performance: Avid Acceptance compares invoices against vendor obligations to maintain accountability and ensure they are receiving value for their money. Using AP automation, their managers can easily access the relevant invoices and confirm that vendors are doing the work they’re supposed to do.
   
   “You have to watch how your partners manage their cash flow, too. In tough times, cash crunches lead some vendors to cut corners or not do all the work that they’re supposed to do,” says Ash. “Stampli syncs up managers and the accounting department so we can ensure vendors are completing the work they’re supposed to do. And nobody has to take hours out of our day.”

Stampli checked all the boxes for Avid Acceptance. It provided them with the ability to streamline and control accounts payable operations, access timely, actionable insights on AP performance and KPIs, facilitate cross-departmental collaboration, and scale AP processes to support their growth.

“I like that Stampli was AP first,” Ash says. “Stampli has made the AP automation process very efficient, better than any other product on the market. Stampli is the leader in invoice processing in my opinion.”

Challenge 5: Improving financial system efficiency

As an integral part of your overall financial system, accounts payable has an impact on financial performance and, ultimately, your bottom line. Financial automation platforms can streamline complex, repetitive processes, improve processing and reporting accuracy, improve audit trails, and facilitate collaboration. However, some AP automation solutions can create as many inefficiencies as they solve if they are incompatible with your existing ERPs and accounting processes. It’s crucial to choose the right solution.

Transform financial performance with the right automation platform

In its 2024 survey, Accounting’s Reluctant AI Revolution, Accounting Today reported that accountants were deeply divided on the difficulty of integrating AI-powered accounting tools with existing ERPs. Over one-third (38%) said that integrating AI tools with their existing ERP or accounting software will be difficult, with 10% saying it would be “significantly difficult.” Another one-third (35%) were unsure of how difficult integration would be, and just under one-third (27%) felt integration would be easy.

Leading AI-powered financial automation platforms address these concerns by offering intuitive interfaces, seamless ERP integration, and proactive customer service. As the only financial automation solution built for accounts payable, Stampli is designed to implement quickly with minimal changes to existing systems or processes. It leads the industry for highest user satisfaction, scoring at the top of the pack for ease of doing business with, ease of use, ease of setup, and ease of admin.

Case study: Purple streamlines AP and reduces invoice processing time by 63%

Purple is known for creating the “World’s First No Pressure Mattress” and kicking off the mattress revolution in 2013. To serve their 42,000+ customers, the Utah-based company works with over 1350 vendors, which was beginning to create a problem. As Purple’s Corporate Controller, Peter Taylor says, the task of manually processing over 1000 invoices each month was overwhelming their AP team: “Our AP inbox was like a giant black hole. We would request that our vendors send invoices to a Purple accounts payable email inbox that was managed by an AP clerk and an AP supervisor.

We did weekly pay runs that took our two resources nearly two full days to draft the list of vendors we needed to pay that week as they manually searched through Outlook to determine which bills needed to be paid.”

Purple knew they needed an AP automation platform to regain control of invoice processing, centralize communications, and reduce their backlog. They were already using SAP Concur’s expense tool, so they tried Concur Invoice. However, the trial was unsuccessful. Implementing Concur required an expensive professional services engagement that took months. Plus, Concur didn’t work well with Purple’s existing Oracle NetSuite system and couldn’t process 65% of their invoices.

After ending the trial with Concur, Purple decided to try Stampli. They were immediately impressed with Stampli’s user-friendly interface, cloud-based platform, and powerful invoice processing capabilities. Stampli also integrated well with Oracle NetSuite, allowing Purple to document 100% of their invoices. Within months, they had reduced their invoice backlog by 50%.

Today, Purple is processing invoices 63% faster than before. Peter describes what impact Stampli has had on AP productivity: “With Stampli we have reduced the time to process invoices from eight days to three days. One of the areas in which we’ve saved the most time is in getting invoices into the system. The second area in which we’ve dramatically reduced time is in getting approvals.

The previous process took their AP team too much time to decide who the approvers should be. According to Peter: “Using Stampli to automate data entry and leveraging artificial intelligence (AI) and optical character recognition to apply GL codes has been great. It’s helping us route invoices to the right approvers much faster.”

Solve your accounts payable problems with Stampli

Stampli is the perfect solution for organizations seeking to optimize accounts payable and improve financial performance. As the only financial automation platform created for how AP teams work, Stampli maximizes efficiency across the procure-to-pay lifecycle by centering on accounts payable functions like payment processing, credit cards, reporting, vendor management, cash flow management, and more.

Stampli’s pre-built integrations support the full functionality of over 70 ERPs, accounting platforms, and other business applications. It features no-code implementation in days, not weeks, with no changes to your existing processes or IT infrastructure.

Get the solution to all your accounts payable challenges. Contact a Stampli AP expert today to learn more.