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8 most-common mistakes made in accounts payable

Posted by Kanika Sinha

October 14, 2021

Accounts payable invoice processing is one of the more challenging aspects of running a business. But it remains an essential one for every organization.

In the absence of a well-run accounts payable process, bills might not get paid on time, supplier relationships are jeopardized, late penalties and other fees may be assessed, and your credit rating could even be impaired. 

To be sure your accounts payable processing is running smoothly, take stock of whether you may inadvertently be committing any of the most-frequently made mistakes that plagues businesses.

Without further ado, here are eight common accounts payable errors:

Mistake #1 – Double payment

Double payments can occur for a number of reasons, but most are related to manual data entry. Inconsistencies in manually entered invoice amounts, supplier information or even coding can cause a single invoice to be paid twice. 

Also, sometimes vendors send a second invoice for the same amount owed, especially if their first invoice wasn’t processed immediately. With two invoices floating around the office, it’s easy to pay them both accidentally.

Mistake #2 – Data entry errors

This is one of the most pervasive and significant mistakes to transpire in accounts payable invoice processing.

When a business has a system that requires manual data entry to pay invoices or create purchase orders, data entry errors like entering information in the wrong field, transposing numbers or missing a decimal are inevitable. 

Mistake #3 – Nonclosure of paid purchase orders

After a company cuts a check for payment on receipt of the invoice and goods or services ordered, it’s essential that the accounts payable department closes the purchase order. But sometimes, AP forgets to do so and risks issuing a payment more than once.

Mistake #4 – Batch-entering your invoices

With lots and lots of invoices to process, the temptation to process them as a batch may arise. While this approach certainly has its time-saving benefits, it is not without drawbacks.

There is a reason that invoices are best processed one at a time — to create a robust audit trail. 

Talk to us about how our outsourced business services can help your startup be proactive in invoicing.

Mistake #5 – Paying invoices before delivery

Overloaded with work, busy accounts payable staff may accidentally pay invoices when they arrive, without checking first that the goods were actually delivered, or if delivered, that they were in the expected condition. 

Although paying bills before time may help earn discounts from suppliers, it’s not always a good idea, particularly if the supplier is new.

Mistake #6 – Disappearing invoices

It’s all too easy for invoices in a manual processing system to disappear in a flurry of paperwork and end up going unpaid.

In addition to creating friction with suppliers, an unpaid invoice can cause serious accounting problems. The liability hits the balance sheet late and the expense goes missing from the current income statement, leaving management with incorrect information about the company's financial position.

Mistake #7 – Unauthorized purchases

Manual processes in accounts payable can exacerbate the problem of unauthorized purchases. There may be cases where employees make without an approved purchase order or instances of inappropriate use of business credit cards or buying from unauthorized suppliers.

Such unauthorized purchases can wreck the business’s most carefully planned budgeting system.

Mistake #8 –

Exception invoices

Not all invoices can be processed the same way. There are always going to be some nonstandard invoices or documents with discrepancies such as incorrect, incomplete or nonmatching information.

Handling such exception invoices takes extra time, and it may so happen that the team processes them without reconciling the discrepancies.

Want more?

Since 2006, Escalon has helped thousands of startups alleviate the burden, freeing up resources to focus on core business activities with our back-office solutions for accounting, HR, payroll, insurance, and recruiting and taxes. Talk to an expert today.


Kanika Sinha
Kanika Sinha

Kanika is an enthusiastic content writer who craves to push the boundaries and explore uncharted territories. With her exceptional writing skills and in-depth knowledge of business-to-business dynamics, she creates compelling narratives that help businesses achieve tangible ROI. When not hunched over the keyboard, you can find her sweating it out in the gym, or indulging in a marathon of adorable movies with her young son.

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