Late supplier payments are one of those problems everyone in finance is aware of and knows are bad. But somehow it keeps on happening anyway.
Invoices slip through the cracks (which can appear in many different places). Approvers sit on emails. Month-end hits, and suddenly you have to worry about late fees and suppliers reaching out about payment.
Unless you’re really behind on your AP process, you probably won't have to worry about the final point too much. But even one or two late payments can add unnecessary strain to your finance team.
So, in this guide we’ll walk through how to speed up accounts payable↗ (AP) and stop paying invoices late, without simply asking your team to ‘work harder’.
Why late payments are more than an operational annoyance
First, let’s explain why paying invoices late isn’t just an admin issue or light annoyance. It actually has a direct impact on a number of different parts of your business, including:
- Cash flow↗ and cost
Not paying invoices on time can lead to various different late payment fees and penalties, as well as missing out on early payment discounts. This can cause unpredictable cash outflows if payments get postponed and bunched together, with knock on effects for FP&A↗. - Supplier relationships and risk
Secondly, there are very real negative impacts on supplier relationships and general risk. Late payment can and will test suppliers’ patience, leading to less willingness to negotiate favourable terms. In turn this can cause potential service disruption if key suppliers tighten credit. - Team productivity and morale
Finally, constant firefighting and urgent payment requests will have an impact on your team. When people are working in reactive mode, they’re more likely to make errors due to rushed approvals.
The good news is that most of this is caused by fixable design issues in how your AP is set up, not by your team being incompetent or lazy.
Why your finance team keeps paying invoices late
So, why does your finance team keep paying invoices late? Before you redesign anything, it helps to name the main culprits. In most organisations, late payments come down to a mix of:
- Decentralised invoice capture
Invoices arrive via email, post, portals, and sometimes direct to stakeholders. AP only sees them once the recipient remembers to forward them. - Unclear or slow approvals
Approvers don’t know which invoices they’re responsible for, what the service level agreement (SLA) is, or where to find them. Approvals sit in inboxes and chat threads. - Manual data entry and matching
Keying in invoice data, coding GLs, and manually matching to POs takes time and introduces errors, which then create additional delays. - Frequent exceptions
Missing POs, wrong prices, wrong supplier records, incorrect tax. There are all sorts of exceptions that can trigger a ping-pong of questions between AP, buyers, and suppliers. - Poor visibility of due dates and workload
If AP can’t see all invoices, their statuses, and due dates in one place, it’s very hard to proactively manage what needs to be paid, and when. - No ownership of on-time payment performance
Nobody is clearly accountable for the KPI “% invoices paid on time”. Without that, everything feels like “best efforts”.
To fix all of these issues, you need a structured approach.
Introducing a simple framework: Diagnose → Simplify → Automate → Measure
When you’re trying to speed up your AP and stop late payments, work through these four stages:
Step 1: Diagnose the current state of your AP setup
First, you need to understand where delays and errors actually occur in your current process. That means getting a clear picture of how invoices flow from arrival to payment. Crucially this is the real process as it stands now, not the ideal one you’re aiming for.
Sit down with your AP team and key stakeholders and document the following:
- All invoice entry points (AP inbox, personal inboxes, portals, post, etc.)
- How invoices are coded and validated (GL, cost centres, tax, suppliers)
- How approvals are requested, chased, and documented
- How payment runs are scheduled and executed
- Where exceptions are handled, and by whom
This exercise is intended to help you identify delays such as:
- Time from invoice receipt → AP first touch
- Time from AP ready → approver decision
- Time from approval → payment run
Analyse a recent sample
Take, for example, the last 2–3 months of invoices and look at:
- % paid after the due date
- Common exception reasons
- Average approval times by department / approver
- Invoices that required multiple clarifications or rework
This will tell you what’s actually slowing you down, so you’re not guessing.
Step 2: Simplify your AP process
Now it’s time to standardise and streamline the workflow before you throw more tools at it. Before automating you need to remove unnecessary complexity, otherwise you’ll just be automating chaos.
1. Centralise invoice capture
Aim for a single, standard entry point for all of your invoices. This means:
- One AP email address, configured so invoices land in your AP tool or queue
- Clear instructions to suppliers on where and how to send invoices
- An internal policy that bans forwarding to personal inboxes and mandates that everything goes to AP
After implementing these steps, you should already see a reduction in lost invoices, and a much clearer picture of the overall AP workload you’re dealing with.
2. Standardise coding, POs and approvals
Now, it’s time to move on to improving your coding and approval processes by implementing the following:
- Require purchase orders for spend above a certain threshold
- Use templates and rules for GL and cost centre coding (by supplier, category, etc.)
- Define approval matrices so it’s crystal clear who approves what, and when
- Limit the number of approval steps to the minimum needed for control
Here the goal is to reduce exceptions and discretionary decisions that may be slowing things down.
3. Create clear targets and responsibilities
Next it’s time to agree on basic targets and responsibilities to keep your AP on track. This could include:
- AP logs invoices within 5 business days of receipt
- Approvers act on requests within 5 business days
- Payment runs happen on set days each week
Make it clear and visible who owns what:
- AP team is responsible for accuracy, processing time, and providing visibility
- Approvers are responsible for timely decisions
- Finance leadership is responsible for the overall percentage of invoices paid on time
Step 3: Automate the slow, manual parts
Now it’s time to use AP automation and AI wherever possible to remove manual steps. Once the process is clean enough, automation can make it fast and predictable.
1. Automate data capture
At the data capture stage, OCR and/or AI-based invoice capture can drastically increase speed and accuracy by:
- Reading key fields (supplier, amounts, dates, line items, tax, etc.)
- Reducing manual typing and the errors that come with it
- Auto-applying coding rules where possible
Rather than being on hand to handle admin and correct errors, this frees the team to focus on exceptions when they arise.
2. Automate routing and approvals
Instead of emailing PDFs around the company while looking for the right approves, use workflow automation to ensure that:
- Invoices are automatically routed to the right approvers based on rules
- Approvers get notifications and reminders in their usual tools (email, apps)
- There’s a clear audit trail of who approved what, and when
You can also set up delegation rules and escalations to stop approvals stalling when people are on leave or unresponsive.
3. Automate matching and checks
Automation can also help out a lot where you have POs and/or goods receipts, e.g.:
- Using automated 2-way or 3-way matching (invoice ↔ PO ↔ receipt)
- Flagging only exceptions for manual review
- Applying tolerance thresholds (e.g. auto-approving small price variances)
The more invoices flow through touchlessly, the more time your team has to handle the tricky ones before they become late.
4. Automate payment runs
Finally, it’s also possible to automate and standardise many aspects of your payment runs. This includes:
- Payment schedules (e.g. twice weekly)
- Payment file creation and approval
- Checks for duplicate payments and large, unusual amounts
The objective is to move from ad-hoc “rush payments” to predictable, scheduled runs aligned with your cash planning.
Step 4: Measure what matters
The final step of this process is to track a small set of KPIs to help you understand if you’re actually improving your AP performance, not just changing it. Here are a few core AP speed and quality KPIs that you can start tracking:
- % of invoices paid on time
This should effectively be your north-star metric for this topic. - AP cycle time
Average time from invoice receipt to payment execution is your main metric to measure your AP speed. - First-time match / touchless rate
% of invoices processed without manual intervention will show you how well automation has taken over from manual matching. - Exception rate
% of invoices that fall out of the standard process due to discrepancies, missing POs, etc. - Average approval time
Broken down by department or approver group.
Make sure to review your KPIs monthly at a minimum, and implement relevant process changes if any of your KPIs are off target. Your goal should be to treat on-time payment performance like a managed metric, not a background annoyance.
Find out more how AI improves accuracy and reduces errors in accounts payable↗ in our blog article.
How Moss can help you speed up your AP process
To speed up AP and stop paying invoices late, you need visibility, simplicity, automation, and accountability. All of this will fall into place if you take a clear, structured approach to rectify the shortfalls in your current accounts payable process.
Moss supports the diagnose → simplify → automate → measure approach you’ve just worked through by centralising all incoming invoices in one place. Instead of chasing PDFs in inboxes and folders, employees can upload invoices or forward them to your dedicated invoice inbox. Moss will automatically read key data like supplier, invoice number and due date so finance can focus on checks, not typing.
From there, Moss structures AP into clear stages like Verify and Approve. Your team can complete coding and route invoices through rules-based approval flows based on criteria like invoice amount, department or cost centre. If an invoice matches a pre-approved purchase request and stays within the requested amount, Moss can auto-approve it and move it directly towards payment.
Finally, Moss helps you ensure that your invoices don’t get stuck. You can pay invoices directly from Moss, bulk-schedule payment runs and let the system automatically release payments once your Moss balance covers them. Approved invoices are marked as ready to export and can be sent to your accounting system via integrations, SFTP or manual export, keeping your downstream reporting and AP KPIs on track and up to date.
