Transform your Accounts Payable (AP) Function into a Profit Center by Boosting Loss Prevention and Recovery 

The world of enterprise finance is complex and comprises many moving parts. Whilst accounts payable (AP) is often seen as a support function within this—quietly managing supplier payments and ensuring the accuracy of financial records and ledgers in the background—this perception is a little misleading. 

AP has the potential to exert a far greater influence than it currently does in many large-scale businesses. For many enterprises, AP contains the untapped potential to become a profit center, by strategically focusing on loss prevention and recovery.

Discover the Untapped Potential of your AP Function

AP’s primary responsibilities are widely understood to be the efficient processing of invoices and management of the AP ledger. Fostering supplier relationships and providing insightful reports to stakeholders are also central areas of focus. 

But whilst these functions are central to its mission, they aren’t the whole story. AP can do much more, and loss prevention and recovery have the potential to transform the value of AP to the enterprise.

Boosting Loss Prevention

• Error detection and correction: A vigilant AP team should be able to promptly identify invoice discrepancies and errors. This includes verifying invoice details, cross-referencing with procurement purchase orders, and spotting duplicate invoices. By catching these issues early, AP can prevent overpayments and minimize financial losses.
• Invoice dispute resolution: AP is often the first line of defense when supplier disputes arise. Proactive dispute resolution not only prevents potential losses but also strengthens supplier relationships. Implementing robust processes for timely communication and negotiation allows AP to take control and arrive at mutually beneficial resolutions.
• Fraud detection: AP plays a crucial role in fraud detection. Suspicious invoices, irregular payment patterns, or duplicate payments can be red flags. By leveraging data analytics and financial acumen, AP should be able to identify and mitigate fraud risks, safeguarding the company’s finances.
• Adhering to compliance: Strict adherence to accounting regulations and internal policies must be uncompromising. AP should ensure every financial transaction complies with these standards, reducing the risk of regulatory fines and penalties.

Boosting Loss Recovery

• Lost discounts: Early payment discounts offered by some suppliers are often overlooked, meaning a missed opportunity to reduce costs through efficiently prioritizing payments to appropriate suppliers. AP should implement dynamic processes to capture these discounts systematically, lowering costs and increasing profitability.
• Duplicate payments: Despite the rigorous processes in place, duplicate payments slip through the net at times. AP should proactively rectify such issues, by tracking and recovering overpayments, further reducing costs.
• Supplier negotiations: Skillful negotiations with suppliers can lead to better terms, discounts, or extended payment periods. With its comprehensive knowledge of the company’s financial obligations, and of the financial relationships and histories with each supplier, AP is well-positioned to engage in these discussions.
• Contract compliance: Ensuring compliance with the terms and conditions outlined in supplier contracts is paramount. AP can work collaboratively with procurement to enforce contract terms, preventing unnecessary expenses and loss.

4 ways to Turn AP into a Profit Center

To maximize the effect of loss prevention and recovery efforts and transform AP into a profit center, there are some crucial points of focus for enterprise finance departments: 

• Invest in the right technology: Implement an advanced AP automation solution to streamline processes and maximize efficiency. This generates data that can be subjected to detailed analysis.
• Leverage data analytics: Utilizing data analytics to identify patterns and anomalies in AP transactions is the gateway to detecting errors and facilitates fraud detection and prevention. 
• Provide training: Ensure AP teams are equipped with the knowledge and skills needed to use the technology effectively, and have strong negotiation, dispute resolution, and compliance management skills.
• Define performance metrics: Ensure you have clear key performance indicators (KPIs) related to loss and recovery, such as error detection, dispute resolution timeframes, and cost recovery. This provides an opportunity to incentivize and motivate AP teams to meet and exceed targets, boosting overall performance.

To learn more about how you can boost loss prevention and recovery with Basware's Statement Matching solution, contact us for more information.