There’s a new reality in Manufacturing: to stay competitive, you need to treat your suppliers like gold. Traditional methods of driving down costs, such as squeezing payment terms or negotiating rock-bottom pricing, are no longer sustainable because they strain supplier relationships and increase the risk of disruption. Finance teams are seeing an increasing need for better supplier experiences as well as financial control and cost efficiency.
However, legacy systems and inefficient processes make it difficult for Accounts Payable teams to provide the supplier experience and more of what these teams need. If you have a hunch that inefficiencies in your Accounts Payable function are hampering the success of these strategic initiatives, you’re probably right.
Why is Accounts Payable so important in Manufacturing?
60% of Finance leaders in manufacturing say Accounts Payable is the least efficient part of their operations. That’s a serious concern as AP sits at the heart of procurement, production and supplier relationships. When it slows down, the entire business operation stands to suffer.
Conversely, when Accounts Payable runs efficiently, it becomes a powerful driver of resilience, productivity and growth. Here's how AP directly influences key areas of your Manufacturing business:
Greater control over working capital
Manual Accounts Payable processes are expensive, with mIn Manufacturing, strong cash flow is essential for reinvestment, cost management and growth. Your AP team plays a critical role by improving visibility and control over outgoing payments. With better oversight, Finance teams can make faster and smarter decisions about how and where to allocate funds to strengthen working capital across the business.
Stronger supplier relationships
Manufacturing survives on long-term, reliable supplier partnerships. Paying on time (or even early) builds trust and gives you the leverage to earn better payment terms, priority services and more flexibility when you need it.
Better planning and forecasting
Accounts Payable is more than just processing invoices. AP data offers valuable insights into compliance adherence, supplier performance and cash flow trends. Importantly, AP data reveals cash flow from the top of the funnel, pinpointing where your spend begins to trickle down - insight your Finance team can use to improve forecasting, reduce inefficiencies, avoid surprises and plan with more confidence.
Common Accounts Payable issues in Manufacturing in 2025
Manual payments are jamming your supplier gears
Manual AP processes are slow, prone to human error and lack scalability. In the new reality of Manufacturing, these vulnerabilities can create major supplier experience problems.
If, like many manufacturers, you’re expanding your supplier base to combat supply chain instability, your AP workload is rapidly growing. However, talent shortages are making it harder to scale the AP team appropriately. This is likely creating a vicious cycle of errors, late payments and frustrated suppliers. Ultimately, it doesn’t matter how large your supplier network is if none of them want to prioritise working with you.
There’s also the reputational impact to consider. In many cases, a loss of trust can be more damaging than the financial consequences. Once partners or customers begin to question your reliability, regaining their confidence can take years. By then, they may have already moved on to a competitor they see as more dependable.
Lack of financial control increases costs
Manual Accounts Payable processes are costly, with manufacturers spending an average of up to $21 per invoice, which is way above average according to IOFM. Still, the costs don’t end there. Despite your best efforts, if your business uses manual AP processes, it’s almost certainly losing money due to a lack of adequate financial controls.
Your AP team likely doesn't have time to reconcile supplier statements or respond to every supplier follow-up. At the same time, data inaccuracies and human error could be undermining your other financial controls.
The result is a mountain of unnecessary costs, including:
- Inflated headcount costs
- Late payment fees
- Duplicate payments
- Payment of fraudulent invoices
Limited visibility impairs decision-making and cash flow management
Your AP team processes large volumes of cross-currency supplier and invoice data daily. If they’re using manual processes and spreadsheets, it’s likely that your AP data is siloed and you can’t get an end-end view of your processes. If you’ve ever tried to get critical insights from siloed data, you’ll know it’s like eating soup with a fork – and the problems don’t end there. It also leads to:
- Poor budgeting, inventory and supply chain management, leading to uninformed decisions
- Impaired cash flow control which damages the financial health of your organisation
- Black boxes between departments that increase the risk of invoice fraud
The case for AP automation
With automation, teams can move away from time-consuming manual tasks and gain faster, more accurate processes. It makes it easier to manage payments, avoid errors, and get a clear picture of spending—all in real time.
AP then shifts from being a cost-heavy, admin task to a smarter, more strategic function that supports stronger supplier partnerships, better financial decisions and more resilient operations.
Eliminate inefficiency
The best AP software automates the end-end process, including matching invoices to POs, identifying and preventing fraud, eliminating manual data entry into back-end systems, electronic approval routing and sending digital payments to suppliers.
By automating your AP team’s pain points, and redirecting their time to more valuable tasks, manufacturers benefit from three positive outcomes:
- More accurate, higher quality data reports
- More timely invoice payments and strengthened supplier relationships
- More elasticity within your AP departments, allowing them to cope with unpredictable workloads without increasing headcount, giving your business greater agility and resilience
Regain control and drive cost savings
Automated AP departments spend far less time processing an invoice when their technology does most of the heavy lifting.
What’s more, solutions with automated statement reconciliation significantly improve AP workflows. Instead of sorting through paperwork to find discrepancies, teams get a ready-made list of issues to resolve. This helps them meet deadlines, address problems promptly, prevent financial losses and uncover due payments.
With Xelix’s end-to-end statement reconciliation module, Liberty Global started reconciling 33 times more supplier statements, uncovering £18 million in unused credit notes and saving £240,000 in duplicate payments in a single month. These results highlight the real impact of automating and optimising AP processes at scale.
End-end visibility and powerful insights
Automated AP processes give Manufacturing Finance teams complete visibility of the end-end process and a single source of truth. With quality data at their fingertips, AP teams can swiftly handle exceptions, resolve disputes and respond to supplier payment status queries.
Plus, with better data and powerful analytics, you get the foundations you need to make optimal decisions. Whether you want to improve cash flow management or identify how to best fund growth, with better data insights, you can make better informed decisions that move the entire business forwards faster.
Strengthen supplier relationships
Automation helps strengthen supplier relationships by enabling consistent, on-time or even early payments, which builds trust and reliability. Vendor portals offer suppliers real-time visibility into invoice and payment statuses, reducing friction and improving communication. Over time, these improvements foster stronger partnerships, which can be a critical advantage during periods of supply chain disruption or uncertainty.
