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Running a business without a smooth AR and AP process is like trying to drive with your brakes on, it’s stressful, inefficient, and could end up costing you more than you think. Late payments, messy workflows, and missed opportunities for integration can all lead to unnecessary frustration and financial strain. But what if you could avoid these common mistakes and streamline your processes to save time, reduce costs, and keep cash flowing seamlessly?
Here’s a closer look at five key mistakes to avoid in your AR and AP process and how fixing them can lead to smoother operations and a healthier bottom line.
Overcomplicating your workflow
You might think more steps mean more control, but in AR and AP management, complexity often equals chaos. Many businesses overcomplicate their workflows by using too many tools or handling too many processes manually. This not only leads to confusion but also increases the risk of errors and delays. 76% of finance professionals say inefficient processes lead to longer payment cycles and more manual work.
For example, A mid-sized software company was using three different systems: one for invoicing, another for tracking payments, and a third for generating financial reports. The result? Confusion, missed payments, and outdated information. It took them an average of 15 days to send out invoices, and payments were often delayed as a result.
Avoid this by
- Simplifying your process: Use one unified platform to handle invoicing, payments, and reporting.
- Automating routine tasks: Schedule automatic payments and recurring invoices.
- Reviewing your workflow regularly: Identify bottlenecks and streamline wherever possible.
Neglecting user roles and permissions
When it comes to financial data, control is key. Without properly setting user roles and permissions, you risk unauthorized access or accidental changes to sensitive information, which could cost you both time and money. 30% of fraud cases stemmed from a lack of internal controls and oversight.
Avoid this by
- Setting role-based permissions: Limit who can edit invoices or access sensitive financial data.
- Regularly reviewing user access: Remove access for employees who no longer need it, and adjust roles as needed.
Forgetting integration capabilities
Manually entering data into multiple systems is a time-consuming nightmare. If your AR/AP system doesn’t sync with your accounting software, you end up doing double the work and risking mistakes in the process.
Avoid this by
- Integrating your systems: Make sure your AR and AP platform talks to your accounting software automatically.
- Automating data entry: Let your systems sync data, so you don’t have to enter everything manually. For example, platforms like Forwardly make this easy by syncing your invoices, bills, and payments with your accounting system. With Forwardly’s seamless 4-way sync, everything automatically updates between your system and your customers’ and vendors’ systems. That means no more manual entry or missed payments, just up-to-date records and less stress.
Ignoring cash flow management
AR and AP directly impact your cash flow. If you’re not monitoring ageing invoices or overdue payments regularly, your cash flow could suffer and so could your business. 82% of small businesses experience late payments, which can lead to serious cash flow problems.
Avoid this by
- Tracking overdue invoices: Regularly review your AR and AP ageing reports.
- Using forecasting tools: Estimate your future cash flow based on incoming and outgoing payments.
- Prioritizing overdue payments: Set up a system to follow up on overdue invoices and pay vendors on time.
Delaying invoice follow-ups
If you wait too long to follow up on unpaid invoices, you’re leaving money on the table. The longer you wait, the harder it is to get paid, and the more stress you’ll face trying to catch up. 40% of businesses struggle to collect payments on time, leading to serious cash flow problems.
Avoid this by
- Setting up automatic payments: Have your system collect automatic payments when invoices are due or overdue.
- Being consistent: Regularly follow up on unpaid invoices without hesitation.
- Offering early payment incentives: Consider offering a discount for early payments or a late fee for overdue ones.
Avoiding these 5 common mistakes can make a world of difference in your AR/AP process. Implementing these tips now will lead to a more efficient, stress-free AR/AP process and help your business maintain healthy cash flow. Let’s make those payments work for you, not against you.
Want to make your AR and AP process even easier? See how Forwardly can help simplify your invoice and bill payments, boost cash flow, and save you time. Give it a try today!
