Accounts Payable Challenges – QuickBooks Online

Intuit QuickBooks Online has become a workhorse for small and medium-sized businesses, and it continues to grow. The customer base for QuickBooks Online has increased 51 percent in just a year to 2.8M users.* Yet accounts payable operations (a.k.a. bill pay) in QuickBooks is still very much a manual process. From vendor onboarding to invoice workflow to electronic bill payments to reconciliation, the “last mile” of QuickBooks can seem insurmountable for growing businesses.

In July of 2018, we took a snapshot survey of 100 QuickBooks users and practitioners about how accounts payable improvements would impact their business or their clients’ businesses. While the results aren’t surprising, they do highlight areas that the QuickBooks community feels are most important.

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How Would Improving AP on QuickBooks Benefit Your Business?

Time is of the essence. No one, particularly those running businesses, wants to spend their time making payments or even accounting for payments. That process includes closing the company’s books, which if done quickly, can provide visibility into the state of the business. In addition, nearly half of respondents want to reduce their risk exposure by implementing financial controls. That makes sense given how accounts payable is the point where a company’s funds leave the building. And of course, what business wouldn’t look for ways to save money when the opportunity arises.

Eliminate wasted time (69.6%)
Speed up financial close / payment reconciliation (46.8%)
Improve financial controls / reduce risk (45.6%)
Save money (43.0%)
Improve payables visibility (31.6%)
Improve vendor relationships (27.8%)
Scale and grow finance (25.3%)
Avoid hiring future AP staff (24.1%)

How Could AP on QuickBooks Be Better?

We asked QuickBooks users about what they thought would make the accounts payable experience better. The results were more spread out, which may indicate how diverse the QuickBooks user population is in terms of need.

Clearly, there are AP features that QuickBooks users clamor for. One feature that’s often lost in the shuffle of “accounts payable automation” is the ability to offer a supplier portal or vendor portal to onboard and communicate with suppliers. Supplier portals have the ability to streamline all communications with vendors including enabling ways to upload invoices, view payment status and history, and update their bank and payment preferences. Electronic payments also matter including the ability to make ACH payments (a.k.a. direct deposit, domestic EFT). Likewise, reconciling those payments directly into QuickBooks was also highly desirable.

Self-Service supplier onboarding / Integrated supplier portal (64.2%)
Make payments using ACH (55.6%)
Automatic payment reconciliation with QuickBooks (50.6%)
Supplier tax ID collection and validation (40.7%)
Touchless OCR invoice processing (32.1%)
Make payments using PayPal (32.1%)
Make payments using wire transfers (30.9%)
Automated payment status communications to suppliers (29.6%)
Make electronic payments outside the U.S. (22.2%)

The Cost of AP to Your Business

An invoice or payment here and there doesn’t seem like a big deal, but most companies aren’t ready to deal with the volume as the business grows. They either staff up or hire outside firms to take on the workload. But what is the benefit of automation around invoice and payment processes? This calculator helps illustrate what taking 80 percent of the workload would mean. An 80 percent work reduction is what we typically see from our customers.

Opportunities to Improve

As a growing business, there are always ways to improve any process. Accounts payable is no exception. For example, if businesses have a high volume of invoices or make a lot of international payments, there are immediate challenges to overcome. Here are just a few.

How can we be more “paperless” in our invoice workflow?

Issues like duplicated payments are chronic in many organizations. And removing paper processes from the accounts payable cycle significantly streamlines AP and the ability to audit that process. Yet the key to reducing paper invoices and checks is not always obvious. It actually starts with proper onboarding of vendors, giving them the means to upload or email PDF invoices, and establishing a flexible remittance strategy. For QuickBooks users, the introduction of an integrated vendor portal and adding more electronic payment methods can make the AP process more paperless.

What are the most effective ways to make cross-border payments?

As your business grows, it may need to pay more vendors who live and operate in other countries. They may be suppliers, freelance contractors, or other services. While a paper check or wire transfer may be the norm, it may not be the best choice. According to the AFP, paper checks have fraud and postal issues associated with them. And wire transfers are second in fraud rate have the highest rate of fraud growth. They can also be expensive, eating into the vendor’s profits. Additionally, vendors may also have to contend with exorbitant currency conversion fees from their bank. Giving vendors a choice into which payment methods work best for them is a great way to strengthen the relationship while also ensuring a more traceable payment for reconciliation purposes.

How do we streamline approvals?

As companies grow, it won’t always be a single person who accepts bills and makes payments. Buyers may need to start confirming invoices. If they’re over a certain amount, a department head or executive will need to approve the invoice. And executing payments will also need approvals as well. You could make everyone log into a tool to do that, but busy folks may not remember to log in. They might forget their passwords or get tripped up with complicated user interfaces. If you can keep things simple by sending an approval email with links to actions they can take, it’s much smoother and more painless.

How can we minimize the time we spend dealing with vendors?

Dealing with vendor inquiries can be a real hassle, especially if you don’t actually have the answer they’re looking for. That often requires time spent investigating what happened to an invoice or payment. Instead, accounts payable automation tools should include ways for the vendor to look up the status of their payments on their own, such as a supplier portal. And rather than sending out a payment with no acknowledgment, every payment attempt should come with an email notification to the vendor so they know when it was sent, how much, and when it can be expected to reach them. If there’s a problem (such as if their account doesn’t exist), they should also be notified automatically so they can fix it themselves.

Can we speed up our monthly, quarterly, or annual financial close?

One of the biggest accounting time expenditures is payment reconciliation to close the books. Data coming from the bank may be delayed and cryptic. Checks may not clear in time (if ever). Transfer and conversion fees might need to be culled from different reports. Multiple payment methods can add greater complexity to reporting. And if there are multiple corporate entities, there will certainly be more layers of work. By consolidating payment transactions into a single system, payment data can be normalized and synced with QuickBooks for easier reporting.

Can we add controls to bank portal access to reduce risk?

Funds leaving your business almost never return. That’s why it’s imperative to ensure that the outgoing payment process is secure. Many companies will limit access to payment systems like bank portals to only a select few in the business. But this isn’t the most auditable process, and it requires high-level executives like CFOs or controllers to spend time entering payment data and logging into banks. By adding financial controls to payment execution, businesses can track and limit who has bank access.