Working with suppliers and vendors is an important part of any company’s operations. There can be numerous challenges when it comes to paying suppliers and ensuring that they are given what they are owed, compensated fairly, and compensated accurately. The accounts payable department usually bears the burden of ensuring invoices are paid accurately and on time. Working in accounts payable, also known as AP, can be a fulfilling experience. However, it comes with its own set of meticulously detailed work and adherence to certain standards and practices. Many accounts payable departments are still run manually, which is inefficient.
Digitizing your AP processes can improve efficiency, make things easier, and give your employees more control over their roles within the company.
1. Invoices that are easier to read
It can take a long time to process paper invoices. For most businesses today, e-invoicing is a better option. You won’t have to worry about invoices being billed to the wrong accounting codes or routed to the wrong locations with this software. The system ensures that all invoices and purchase orders are accounted for to the proper expense accounts because the GL codes are automatically assigned to them.
In addition, invoices can be authorized for payment from any department member’s mobile phone. This lowers the total cost per invoice while also improving the overall workflow of your AP department. And, thanks to the streamlined/simplified nature of submitting and paying invoices electronically, e-invoicing allows your company to save a lot of money by leveraging early payment discounts or reducing days for payment outstanding.
2. Robotics
Automation makes invoice matching easier for the department to handle throughout the procure-to-pay process. Every aspect of running an AP department is available via automation and powerful software in AP automation. Do you need to keep track of your expenses in a scalable manner? How about increasing the efficiency of your working capital? What about keeping track of invoices that haven’t been paid on time, or managing pre-approved and post-approved spending across the organization? Automation enables you to make the most of the talent you already have on your team while also improving your workflow. An automated system makes it much easier to track, pay, and manage invoices.
3. Scalable AP Methodology
It is necessary for an AP process to be scalable in order to make it more efficient. Scalability in accounts payable is as important as having term life insurance in our personal lives. When you’re dealing with a large number of transactions, scalability is critical. It’s especially true when the number of transactions rises throughout the month. Assume you complete 200 to 300 transactions each month. You have an influx of new business and are now doing 600 to 800 transactions per day. In order to handle that workload, your AP processes must be scalable. With a manual or traditional process, this is difficult to accommodate. You’ll need to make sure the cloud-based automation system you’re using can handle an increased workload if you want your AP department to keep up with transactions as your company grows.
Many Enterprise Management Systems used to automate AP processes are scalable, so you can benefit from the automation while also knowing that your company’s growth will not be stifled or hampered by software that can’t keep up.
4. Fraud Detection and Prevention
Someone has always been looking for ways to take advantage of others since the beginning of time. Fraud is one of the most significant issues confronting most businesses today. The following are the most effective messages for reducing fraud in accounts payable:
- Auditing on a regular basis
- Check your bank statements twice.
- Keep an eye on key performance indicators (KPIs)
- Establish and enforce purchasing compliance procedures.
- Make Use Of Guided Purchasing
- Clearly define the rules for reimbursement of expenses.
- Define roles and separate responsibilities.
- Maintain up-to-date supplier lists and educate employees on fraud and risk.
- Automate your accounts payable processes.
Finally, technology makes it more difficult to commit fraud. It has a tendency to automatically reinforce some of the most effective fraud-prevention techniques. If not prevented, AP fraud can cause significant financial problems, so it’s best to have high-quality fraud prevention and risk management system in place to help the AP department run smoothly.
5. Make the most of your working capital
How does your business handle invoices, payables, and receivables on a daily basis? What about stockpiles? The key to optimizing your working capital is to understand where your company’s cash is locked up. Working capital is calculated over the course of a year. Calculating payables, inventory, and receivables entails manually calculating these figures from the cost of goods and other vectors using complex equations.
Software aids in working capital optimization because it can perform these formulas for you and provide you with quickly analyzed data. You can get useful information to assist me in making better decisions from there. It all boils down to effective treasury management, which allows you to keep track of your cash flow, track the number of days payment has been outstanding, take advantage of early payment discounts, and reduce risk and borrowing costs across the board.
Learn more from business and read How Your Small Business Can Accept Any Form of Digital Payment.
