Most AP leaders believe their current ERP or AP system is doing the job of surfacing open credits and flagging erroneous payments. But ERPs don’t extract statement data, match records, or handle vendor follow-up.
Your AP team does.
And despite how important this work is, statement reconciliations are often buried at the bottom of the priority list — especially when competing with more urgent asks like paying suppliers on time and handling invoice disputes. It’s a manually intensive task no one wants to do.
Yet assuming your statement reconciliation process is ‘covered’ can be putting your liquidity, supplier relationships, and reputation at risk. Ultimately, there’s a gap between what ERP and AP systems do and the work your team actually has to manage.
Here’s what that process looks like in practice.
Understanding the Process: Supplier Reconciliations in Action
At first glance, reconciling supplier statements seems simple enough. Your AP team manually reviews and matches statements to invoices to identify gaps, then follows up with suppliers to resolve discrepancies and balance the books.
While straightforward enough, it’s far from the reality. Picture this scenario most AP teams face daily.
You're on a small team processing large volumes of invoices a day, sometimes hundreds coming in from several different sources: mail, email, EDI, ERP, etc. It's the end of the month, and it's time to request supplier statements for reconciliation. Depending on the volume, you may send more than 100 email requests.
A few days pass, and you've only received a handful of statements. So, you send a follow-up. Once the statement arrives, the arduous task of line-by-line review begins. You start by logging into the ERP or AP system, exporting all the data, and loading it into an Excel spreadsheet.
Using VLOOKUP, you start going line by line, matching recorded data to the statement. You notice an invoice is missing, so you reach back out to the supplier to retrieve the missing invoice for processing. In the process, you miss an open credit due to a duplicate payment you didn’t catch.
That’s still money lost, even if partially recovered.
Meanwhile, you're under pressure to complete the task so the finance team can close the books. Because the process is so manual, you unwittingly make mistakes you can’t fix in time due to the deadline.
Now imagine repeating this process across 100 suppliers with varying formats, statement types, and submission timelines.
The True Risk of Manual Supplier Reconciliations
Sifting through countless statements and records to find missing invoices is inefficient. So too is manually keying in invoice information under a tight deadline, increasing the margin for errors. Most organizations we’ve engaged with work around this by only reviewing the top 10%-20% of suppliers in their network.
But if you’re dealing with payment errors from top suppliers, imagine what’s missing with the remaining 80%-90%?
It’s estimated that 1.5% of all outgoing cash flow is attributed to duplicate payments. At a time when your leadership is being tasked with ensuring cost discipline and driving efficiency, are you really okay with manual processes putting the business at risk?
Cash flow is the obvious risk, but what about supplier relationships?
Fail to make timely payments to a supplier and you can see supply chain disruptions ripple across the organization. Worse yet, the continued failure of poor financial controls can diminish supplier trust, resulting in loss of business and damaged reputation — impacting competitive advantage and growth opportunities.
There’s also the cost factor.
AP teams spend dozens of hours reconciling statements. That’s time that could be better spent on strategic tasks like reporting and planning, not replacing team members burned out by manual processes.
And if you’re in a heavily regulated business environment, the cost of non-compliance and penalties only adds to the cost burden of manual reconciliations. With the macroeconomic climate rife with uncertainty, will you let something that can be easily solved impact your company’s market competitiveness?
Eliminate 80% of the Manual Work With AI-Powered Automation
The cost of poor financial controls adds up over time. Why let a manual process that can be automated chip away at your team’s resolve, supplier relationships, or cash flow?
AI-powered solutions like our FlexTrap Statement Reconciliation module can eliminate 80% of the manual work in reconciling statements by:
-
Automating supplier communications
(sending outreach and follow-ups) -
Extracting data from several statement formats and sources (email, manual input, EDI, etc.)
-
Matching statement data to ERP data
-
Surfacing open credits
-
Identifying supplier compliance gaps
-
Flagging open invoices
Rather than spending time matching invoices line by line, supplier by supplier, your AP team has more time to focus on what really matters: protecting the business' financial health. We've seen AP teams that have implemented FlexTrap expand supplier coverage by 100%, experiencing an uplift in open credits of 50%.
If ensuring accurate payment data is key to driving financial decisions, automating and streamlining this known tedious process will enable your organization to better navigate a tight and uncertain market. Likewise, it will relieve your team's workload, improving productivity and efficiency — a needed competitive advantage today.