While there may be a number of reasons that organizations cannot pay bills exist, this article aims to evaluate manual company processes that prevent a company from capitalizing on early-pay discounts.
- Manually Processing Invoices or Poor AP Automation
One of the most obvious reasons a company fails to capitalize on early-pay discounts comes from inefficiency in the invoice processing process. Oftentimes, companies become saturated with invoices and end up hiring temps to help clear invoice backlogs. While this may be a short-term solution to getting through an influx of invoices, it typically leads to even more inefficiencies and errors.
An accounts payable department that is manually processing invoices is not taking advantage of available technology to automate the accounts payable process. AP automation can help reduce the time it takes to process an invoice, from receipt to payment. In turn, this frees up time for AP staff members to focus on other tasks, such as analyzing spend and identifying early pay discounts.
- Not Connecting with Suppliers for Early Payment Discounts
In order to take advantage of early pay discounts, companies need to proactively reach out to their suppliers. This means having a dedicated accounts payable team member or accounts payable manager who is responsible for maintaining supplier relationships.
Suppliers are more likely to offer early payment discounts to companies that they have a good relationship with. Therefore, it is important that accounts payable departments nurture their supplier relationships. This can be done by ensuring payments are made on time, every time. Additionally, accounts payable teams should aim to streamline the invoice submission process for suppliers, as this will make it more likely that suppliers will offer early pay discounts.
- Not Leveraging Dynamic Discounting Platforms
Another reason companies may fail to take advantage of early pay discounts is because they are not using dynamic discounting platforms. Dynamic discounting platforms connect buyers and suppliers in real-time so that buyers can take advantage.
- Still Receiving Paper Invoices
When invoices cannot be traced and there is no digital record of receiving an invoice, paper invoices can end up being lost or overlooked. Companies are usually only notified when they are past due on an invoice.
- No Traceability
A lack of tools used to process invoices can lead to invoice oversight. When not utilizing a tool that can inform users of late or nearing deadlines, invoice discounts can be frequently lost.
- Employee Oversight
Many invoice approvals rely on a sequence of invoice approvals. When employees are late or forgetful on invoice approval notices, invoices and especially early pay discounts slip through the cracks.
- Lack of Management
AP always needs some form of management, whether it be to resolve invoice exceptions, or cracking down on forgetful approvers. A lack of management often causes invoice approvals and other issues to delay invoices beyond early pay discount dates.
- Inadequate Systems
Poor accounts payable systems are another big factor in missed early pay discounts. Outdated or manual systems can cause a number of errors, from duplicate invoices to untraceable ones.
- Vendor Mistakes
Oftentimes, companies will miss out on early pay discounts because the vendor made a mistake on the invoice. This could be anything from incorrect account numbers to late fees being tacked on.
- Fraudulent Activity
Unfortunately, some companies try to take advantage of early-pay discount programs by committing fraud. This includes things like creating fake invoices or overstating the amount due. Fraudulent activity not only takes advantage of the system, but it also puts honest companies at a disadvantage.
While there are a number of reasons that early pay discounts are missed, many of them can be avoided with proper accounts payable management. Utilizing automation and digital tools can help to streamline the accounts payable process and make it easier to avoid mistakes. In addition, AP management can help to ensure that invoices are properly approved and processed in a timely manner. By taking these steps, companies can avoid missing out on early pay discounts and improve their overall accounts payable process.
EZ Cloud offers a variety of features to assist in capitalizing on early-pay discounts:
- EZ Cloud offers a machine-learning-based extraction engine that is tuned specifically for your company. An already industry-leading extraction rate increases gradually over time as you process invoices.
- EZ Cloud offers digital capture methods including email capture for customers looking to digitize how they receive invoices. Additionally, suppliers can be invited to collaborate with your organization, where they can upload invoices directly to you in the EZ Cloud application.
- EZ Cloud offers a variety of powerful metrics including tracking invoice due dates, employee oversight, etc. Issues preventing you from capitalizing on early-pay discounts can easily be traced to the root of the problem.
Want to learn more about how EZ Cloud can improve your current process? Schedule a demo with us.