For businesses to stay at the top of their game in this competitive era amidst ongoing economic uncertainty, every aspect of business operations must be streamlined, and the accounts payable (AP) function is no exception.
AP is a notoriously time consuming, expensive business department and mistakes can be frequent due to the sheer amount of number punching involved. Having an efficient and reliable AP function has never been more critical to ensuring business stability.
Improvements to your AP department can lead to better customer relationships, more insight into your cashflow and time efficiencies that mean personnel can focus on other pressing business matters.
We are going to explore our top tips for improving your AP processes for everyone involved to ensure a profitable and successful business.
Of course, our biggest tip here is to investigate AP automation. Automating your AP function means investing in software that will capture invoices electronically (via a dedicated email address), and invoice coding automatically implemented, before an approval process electronically to nominated approvers. Automating your AP speeds up the approval process enormously, reduces errors, minimises fraud, missing invoices and invoices being paid twice, and saves money.
Many suppliers are still offering you the choice to receive an electronic or paper invoice. Where possible, always opt for the electronic version so you’re not waiting for the invoice to arrive via the post and it reduces the risk of late payments if an invoice gets lost or damaged.
Standardising your AP process is key and having a clear, concise step-by-step process for handling and paying invoices will ensure everyone knows what they’re doing and help make the process more efficient. An invoice ageing report will help you keep on top of invoices which have past their deadline or are approaching it so you can prioritise these. It’s worth noting here that AP automation software will do all of this electronically for you!
You’re not superhuman and there is no shame in setting up multiple reminders, so you don’t forget to pay invoices on time. In fact, we thoroughly recommend it.
It’s critical to archive your files for audit purposes, but auditing aside, it’s an AP best practice to file your documents thoroughly so you can keep track of invoice data, receipts, purchase orders and any supplier notices.
Nothing will slow down the payment of invoices like having the wrong contact information so regularly review your contact details to ensure all methods of communication are up-to-date and store these collectively so the information is always on hand as needed.
Having a good relationship with your supplier can go a long way – it can help you negotiate better rates, ensure a stable supply chain, offer a degree of flexibility when you need a last minute order and many other reasons. Therefore, paying invoices quickly is always the best course of action to ensure you and your suppliers stay friends.
Just because you can afford to pay an invoice doesn’t mean you shouldn’t look for discounts where possible – some suppliers offer early payment incentives. Taking advantage of discounts and budgeting effectively will help you build up a cash reserve which will help protect your business in the event of an unforeseen cost.
It’s easy for us to say “don’t make mistakes”, but we mean it! Mistakes in data entry can have time consuming and costly ramifications for a business so check, double check and triple check your data.
Invoice fraud is on the rise and avoiding fraud has become one of the biggest concerns for businesses large and small. It’s vital to be aware of invoice fraud and the different means fraudsters are adopting to try and part organisations with much needed income.
Streamlining your AP department has become critical to staying competitive and economically stable and within this blog post we have examined our key tips for improving your AP process. Arguably, the largest way you can streamline your AP is to automate, which will help reduce costs, minimise errors, reduce the risk of fraud, drive efficiency and save time. All of which will improve the running of your AP department and improve profitability.
However, if your business is not able to invest in a robust AP Automation solution then we have explored other ways in which you can improve your AP department including simply building good supplier relationships, organising your files and opting for electronic invoices where possible. All these steps will go a long way in improving your AP function if the adoption of automation software is not an option at this time.
For more information about AP Automation coming soon with Opera 3 SQL SE please contact us today.
Posted On: June 22, 2023
