Your business can incur endless problems if your accounts payable is not flawless. Post pandemic all kinds of businesses have suffered from the unpredictable scenarios coming their way. The situation has become extremely volatile and sensitive. When you are working in such unpredictable scenarios not having impeccable bookkeeping and accounting records can be a grave mistake.
From incurring losses to legal and tax issues at the year-end, the problems of bad accounting are endless. The core of accounting lies in keeping track of accounts payable. What you owe to people is directly dependent on the company's cash flow and money store. Gross mistakes in accounting can lead to unsolvable discrepancies resulting in major roadblocks in business.
Top Mistakes in Account Payables Your Business Needs to Avoid
1. Double payments and lost invoices
Physical paper and invoices are always a high risk affair. A human can simply misplace or lose it any given time. This puts you up for a lot of trouble. When you have no evidence to prove your accounts payable then releasing double payments can become a real thing. Your word of mouth literally holds no value if you lose your invoices and records of payment. This is exactly why automated invoices are important. Additionally they also help reduce costs substantially. Businesses save more than 29% by automating their invoice processing.
2. Manual invoices
Almost 53% of Account Payables believe that manual invoices are the biggest reason for data discrepancies and want to do away with it. Are you getting troubled with pilling up manual bills? You need an implementation consultant to get a better plan in place to tackle this. Vendors are of not much help in this because to date most of them send invoices on paper.
You need to shift to a technical account management system to battle this problem. That might seem like a lot of extra costs for you to do it in-house and get an additional team for it. But it is within KriyaGo’s area of expertise and we are here to provide you with the right tools for your growth.
3. Minor errors in data entry
When you manually input the data from physical invoices and print and share invoices on paper there remains a chance of data entry errors. Though it is an understandable human error, it will also give your vendors to hold you accountable for it. It will give them the chance to question the transparency of your work and eventually lose business. In the long run, this will spread a bad image about your brand and set you on a downward slope from thereon.
As per market research the usage of automated accounting reduces data entry discrepancies by 90%. Wondering if your business should finally get back office outsourcing services for accounting? Contact KriyaGo to learn more over an hour long free consultation call with our experts.
4. Not taking online payments
If you do not take online payments then data forging in payments can be a big concern. You will not have data evidence other than pieces of papers to prove your dues. Cheque based payments can also lead to inconveniences like no way to track payment status.
The major benefit of taking online payment is keeping track of all transactions and retrieving payment data in a click. Whenever there is doubt or data mismatch you can easily go back to tracking every single piece of transaction if your data is online. There are innumerable online payment methods these days and now you can work them to your advantage.
5. Poor record keeping and data tracking
Poor accounting system can have multi-layered effects on your business that can last longer than you would expect. From failing to meet up with tax compliances, monthly audit reports and increasing unretrievable payments, the problems are endless. You need efficient bookkeeping reconciliation services to overcome these.
If you get outsourced bookkeeping services you can always hold them accountable for all your records. If they take on your business as a client then they are responsible for all accounting problems as well. This helps in getting more transparency in business and better vendor and client relations.
Even Fortune 500 companies have lost more than $480 million due to poor record keeping. If you think you can get away from it so easily, you might want to rethink that.
6. Releasing payments before service is completed
Dealing with long-term vendors can lead to a lot of unsaid rules like trusting them with payments and deliveries. This is a very dangerous avenue to go down. Once you become complacent with delayed deliveries by vendors yet you release payments on time, it opens up doors for fraud. No matter how strong and old relations are with a vendor, you should have strict guidelines in place for all accounts payable. Yes, sometimes paying beforehand may entitle you for some discounts and benefits. But releasing payments before your rightful service is completed can result in a lot of pending work with huge loss of money.
7. Allowing unauthorized purchases without formal invoices
There are many companies who let unauthorized purchases go on without proper documents. You might trust one particular employee in keeping transparency in conducting this. There is hardly any guarantee that other employees and vendors will not steal from you. If you do not make formal invoices compulsory you can be held responsible for accounts payable that may not even exist. To stop such data forgery you need a proper automated system in place.
Major Takeaway
As a business owner when you avoid such gross accounts payable mistakes, you help stabilise your position in the market. Outsourcing and automating your accounting needs will benefit keep your life hassle free and let you focus on scaling the business to new heights.
KriyaGo’s team of experts and consultants can make the process easy and effortless for your team. We will together create your custom-built expert accounting system to reduce hassle and cut costs and improve profits.
