An efficient accounts payable process doesn’t just make suppliers happy, it also lets you avoid any late-payment penalties. In some cases, your business can also save a lot through supplier rebates for timely/early payments.
Some of the most common problems related to accounts payable are matching errors, unauthorised purchases, lost invoices, paying multiple times, payments made before the services are delivered, and late payments. What can your accounts payable team do to resolve most of these issues? Here are some ways to build a highly effective AP process.
1) Go paperless: There are significant advantages to automating the accounts payable process, and this includes maximising your savings, discounts, and rebates. AP automation enables businesses to automatically generate new purchase orders (POs), electronically validate and accept invoices, approve requisitions, track goods received, and pay invoices on time.
2) Centralise AP processing and reporting: Moving from siloed teams working with different divisions to a centralised team can help in implementing standard processes and technologies across a business. By clearly defining the KPIs for the AP team, it becomes possible to measure performance against predefined metrics and gain greater visibility in the entire process. Needless to say, centralisation enables businesses to accomplish more tasks quickly and with fewer resources.
Learn how QX transformed the accounts payable process for one of the world’s largest beverage producers & distributors here.
3) Proper procurement and inventory management: Cash is king; it needs to be used in a judicious and prudent fashion. Once a business is able to optimise its inventory, it can focus on reducing costs and improving staff communication. It’s also a good idea to do periodic inventory checks and invest in automating the procurement system.
4) Plan for timely payments: On-time payments lead to better relationships with vendors. Additionally, this could translate into better deals, payment terms, and discounts. From a long-term standpoint, happy vendors may enable bulk buying with significant discounts, recurring orders, and maximised credit periods. The trick here is to optimise the payments so that you can get all the early bird discounts without depleting your working capital.
5) Eliminate manual errors: AP automation is the key to eliminating human error. Automated systems can capture both digital and paper-based information accurately, automatically process new invoices, and enable smoother invoice payments.
6) Set up supplier portals: This can be advantageous to both a business and its suppliers. A supplier portal can keep track of the order status, delivery schedules, potential product shortages, and payments received electronically. Automation also reduces manual errors and helps improve accuracy.
7) Create management workflows: These can help increase the efficiency of AP processes. Management workflows can also enable businesses to better identify and resolve any bottlenecks and streamline the AP process; thus, improving efficiency and liquidity management.
Although the COVID-19 pandemic presents significant challenges to businesses across sectors, it’s possible to turn things around by making small yet substantial changes to the way your process functions. With the right blend of process optimisation and digitisation/automation, you can transform how your accounts payable process works.
How QX Helps
QX provides outsourced finance & accounting services to businesses across industries. Over the last decade and a half, we have enabled transformation for some of the leading manufacturers in the market. We follow a unique partnership that allows us to better understand your organisational needs, devise effective solutions and ensure seamless transition.
Our range of services is highly flexible in nature and our team can work with all major finance & accounting software. In addition, we are also capable of identifying and implementing any additional software to boost the efficiency of your accounts payable process.
Partner with QX to get the support you need for transforming your finance operations. Contact us to set up a free, no-obligation consultation now.