What are the top compliance concerns for accounts payable teams?

Varying tax regulations

Tax regulations can vary a lot across countries and regions. Things like VAT/GST rates, withholding tax duties, and changing e-invoicing rules also change. AP managers have the tough job of navigating different tax laws and rules, which can cause confusion and increase the risk of non-compliance and hefty penalties and fines. Staying on top of timely tax reporting, keeping detailed records for audits, and managing documentation for tax credits are essential tasks for your AP team.

Global mandates for e-invoicing and archiving

As mandatory e-invoicing gains traction in many regions, including Europe, Latin America, and the Middle East, you have to stay on top of requirements. International businesses have even more compliance challenges because of the different e-invoicing rules and providers. On top of that, invoice archiving rules vary quite a bit, with some countries requiring storage for up to ten years, which adds extra pressure if you are part of a smaller AP team. Keeping thorough records and managing your paperwork for tax credits is important to avoid penalties.

Read Pagero Blog: The rise of e-invoicing CTC models across the world

Fraud detection and prevention

Fraud remains a significant concern for AP teams, especially if you are using manual AP methods. Our research shows that 20 percent of finance professionals cannot estimate how much fraud costs them—because they’re often unaware that it’s happening—but the other 80 percent put the average cost at $133,000 annually. Fake invoices and payments can go unnoticed, leading to financial loss and reputational damage. New fraud tactics are also emerging, like deepfake fraud scams, and internal fraud is often a culprit – making it even more challenging to catch.

Data privacy and security

The 2024 Tech Trends in Finance report by Gartner shows data security as a top concern for software buyers, and that includes AP. Why? There are risks of data breaches, phishing attacks, internal fraud, and more. Plus, with regulations like the GDPR in Europe and the CCPA, PCI DSS, and HIPAA in the U.S., you have to be on top of it when it comes to securing sensitive financial data. Ignoring data privacy laws can lead to some serious fines, so keeping data safe during storage and transfer should be a top priority for your AP team.

Transaction accuracy

Every transaction must be accurate. Manual invoice and payment processes increase the likelihood of duplicate payments, inaccurate invoice amounts, or misapplied credits. These mistakes can lead to compliance problems, financial fines, or strained vendor relationships. Making sure transactions are accurate, timely, and well-documented is vital not just for following financial regulations like SOX but also for keeping vendor trust and steering clear of potential audits or disputes.

Industry-specific standards

Some industries, like healthcare, financial services, and government contracting, deal with extra layers of regulatory oversight beyond the usual financial rules. Healthcare organizations must comply with HIPAA to keep sensitive patient info safe in their financial transactions, while financial institutions must follow SOX to ensure transparency and accuracy in their reporting. Government contractors often face strict auditing requirements and need to comply with regulations like the Federal Acquisition Regulation (FAR). Not meeting these standards can lead to serious penalties, legal trouble, or even loss of business, so understanding industry-specific standards is a must.