Most Indian businesses are driven by two major factors: ambition and rapid growth. As a company expands into new markets or diversifies its offerings, Finance teams play a major role in deciding how resources for scaling operations are to be allocated.
While the prospect of creating a new financial strategy for sustainable scaling is exciting for most teams, one critical operational area is often ignored and tends to remain outdated. Accounts Payable (AP) is a process that is frequently overlooked and left to manual devices. However, this oversight can actually cost businesses profitability, growth, and reputation. Relying only on traditional methods as businesses scale without the strategic advantage of AP automation is a problem that often rears its head at the worst time possible. Let’s understand the common mistakes businesses make when they scale without AP automation.
Invoice volumes tend to surge with growth, and the amount of manual data entries to be done can be the breeding ground for errors. Incorrect amounts or wrong vendor details are common problems that could lead to payment discrepancies. Such errors can result in re-work and complicate ledger reconciliation, especially with fluctuating GST rates.
Manual AP systems are vulnerable to duplicate payments. Without automated checks and balances, the chances of paying the same invoice twice can increase significantly. This directly impacts the working capital, leading to unnecessary cash outflow.
Growth can mean more complex approval workflows and a larger number of stakeholders. In a manual system, invoices can get lost in inboxes or sit awaiting physical signatures, leading to significant payment delays. In India, where vendor relationships are paramount, late payments can strain trust, impact future supply, and even result in penalties.
Manual processes lack strong controls and clear audit trails, making them susceptible to fraudulent activities. Fake invoices, inflated amounts, or payments to non-existent vendors can go undetected without automated verification and multi-layered approval processes that AP automation provides. This poses a significant financial and reputational risk.
Without real-time visibility into your AP cycle, CFOs lack complete control over cash flow and financial commitments. It becomes challenging to accurately forecast expenditures, track outstanding liabilities, or identify unapproved spending. This limited insight hinders strategic financial planning and effective working capital management, which is crucial for scaling.
For Indian businesses, GST compliance is a continuous challenge. Manual reconciliation of purchase invoices against GSTR-2A/2B for Input Tax Credit (ITC) claims is a time-intensive and error-prone process. Missed or incorrect ITC claims directly impact profitability and can trigger scrutiny from tax authorities, leading to penalties and audits. AP automation helps maintain proper trails and enables compliance to avoid such issues.
The overall impact of the mistakes mentioned above is massive operational inefficiency. Finance teams spend countless hours on mundane data entry tasks, chasing approvals, and resolving disputes instead of focusing on strategic analysis and value-added tasks. This leads to employee burnout, slows down financial operations, and creates a significant bottleneck for business expansion.
AP automation can transform financial operations and streamline processes for sustainable growth. By automating invoice capture, matching, approval workflows, and payment processing, businesses can unlock a wide range of advantages, such as –
For Indian businesses, scaling warrants AP automation to improve efficiency in financial operations and minimize resource wastage. From ensuring timely payments to improving vendor relationships, AP automation allows businesses to grow sustainably. With RazorpayX’s AP automation tools, scaling a business is easier than ever. Its suite of features adapts to growing operations, ensuring expansion is never compromised.
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