How Well Is Your Accounts Payable Process Optimized?
Accounts payable appear straightforward on paper. Payments are made, and invoices are received. It is unquestionably essential to the efficient operation of a company; it is seen as an important but repetitive task completed by the back office, possibly without much nuance. There is much room for improvement for many organizations to create and implement best practices for improving their AP processes. The outcomes can enhance cash flow, save time, and free up staff members for other duties. For many businesses, it’s a department that could use some improvement.
Switching to a digital invoicing system is one of the simplest ways to improve your efficiency. Paper invoices require extra filing space and are much simpler to lose, increasing uncertainty. Faster payments not only make you more popular with partners and suppliers, but they can also save you money by preventing late fees. Additionally, digital invoices are simpler to track and store because digital invoices are just that—digital. There won’t be any more crowded filing rooms or hassles with interoffice mail that gets misplaced, leading to duplicate documents and ambiguous statuses. Instead, it makes everyone’s lives easier because team members can quickly look up invoices to determine the status.
Centralizing payments is crucial when processing supplier invoices. It is much simpler to get a clear picture of the money leaving the company if all payments are made from one account. Avoid using multiple accounts or credit cards, paying invoices on an ad hoc basis, or doing other things. Splitting your invoice payments exposes you to fraud risk, making it more difficult to track how much your business pays each month.
Knowing what you owe, to whom, and by whom is crucial for managing cash flow, creating a budget, and making decisions. To achieve this, you must ensure that every overdue payment is accurately tracked in your accounting or expense management software. Managing repeating payments can be stressful and distracting. This can be avoided with recurring payments. You should, however, strike a balance between this and the requirement for payment visibility because you don’t want to be billed for items you no longer require.
Employees frequently make mistakes because they are unsure of a crucial fact, specifically who approves the payment of supplier invoices. You must know who is in charge of authorizing payment for each client invoice. Knowing who approved a specific payment in the event of spending irregularities is essential to solving the case. Furthermore, having clearly defined responsibilities lessens the possibility of invoices slipping through the cracks and going unpaid.
Setting up calendar reminders for payment due dates is another way to streamline accounts payable. Though reminders might seem like a small step in a busy accounts payable department that manages many payments on various dates, they are crucial for on-time payments and maintaining goodwill with suppliers. You can set up the best calendar alerts for you and your team by syncing your business account with financial management platforms. These platforms offer businesses secured financial management solutions and an exclusive reward system for partnering with them.