A well-optimized Accounts Payable function frees-up the working capital, improves the liquidity, reduces the cost, improves the level of service, provides better business transparency and plays a crucial role in improving the business relationships.
However being one of the most manuals, time-consuming processes in the accounting whilst also being the most critical function with a huge impact on the cash flow, a company should always look for ways to optimize their Accounts Payable function.
Having worked with hundreds of business in the US, our team at Back Office Accountants has helped them level-up their AP function by following a customized approach that suits the needs and goals of each business. However the basic outline always remains the same: We identify and analyse the problems, pitfalls, and mistakes of the AP process and layout a streamlined process with well-established and advanced AP best practices.
While we have talked about common mistakes of AP process here, this blog is dedicated to giving you information about basic and key AP practices that can lay the foundation for optimizing your Accounts Payable or even help you tweak it to siege significant benefits. So read on:
Focus on Improving Invoice Processing:
Invoice process does occupy a lion share of time, money and effort and also is a natural location for error-prone accounting, with ample scope for level-up. A significant improvement you can make is to centralize the invoice processing to save time and eliminate redundancies associated with processing errors that can result in costly mistakes
If you follow manual invoice processing then naturally more errors creep-in as the volume of invoices increase gradually. At times AP personnel can make a mistake of piling them up to knock them off at one go, and this only delays the process and increases the risk of errors. Instead, it is better to capture them in small doses to process them in simple batches to limit the errors and decrease the time spent on the processing.
Adopt Efficient Payment Technologies:
Improving invoice processing and adopting efficient and versatile payment technologies must go hand in hand to make significant strides when it comes to the Accounts Payable Process. By adopting electronic payments for Accounts Payable Process, a business can benefit from improved accuracy, controls and easier access to the data that is crucial for a streamlined approach. Having versatile payment options available at hand can help a business choose the right payment option for the right vendor at right time, to make better savings and forge better relationships with the suppliers.
Enhance Data Analysis & Reporting:
Having worked with all types of small, medium and large business to provide back-office accounting services, a common difference we identified is the time spent to data analysis and reporting. Large profitable business extract as much information as possible and spend significant time in high value functions like data analysis and reporting to gain business intelligence and strategic insights. Time and again the analysis helps identify of bottlenecks in AP workflow, monitors and measures the speed and volume of invoices, find a solution to improve accuracy and improves fraud-detection.
If you are a small and medium business owner, improving your data analysis and reporting capabilities serves as an able feedback loop that significantly improves your AP workflow.
Replace the manual AP Process with Automated AP:
It is 2021 and if you are still adopting manual AP process then you are missing out a bucket load of benefits a well-optimized and streamlined AP has to offer.
Yes, the old-fashioned manual AP process did work efficiently for years now but it is still costing exorbitant amounts of time, effort and money for the AP teams now. The old reliable way of checks, printed invoices, manual verifications can now be duly replaced even-more reliable, quick, error-free efficient and easily scalable automated AP solutions. Having your manual process automated quickly solve all the problems gives you more control and transparency over the entire process laying a strong foundation for increased ROI. We have thoroughly covered the importance and benefits of automated Accounts Payable, you can read it here.
All the above practice are worth being adopted and emulated while some being basic is more than essential for an optimized Accounts Payable Process. However, every business is relegated with their own set of problems in AP demanding a customized solution that is tailored for the business process, needs and goals.
If you are a small and medium business looking for Accounts Payable Services to maximize your working capital, improve your liquidity while reducing the security risks at an affordable price, our team at Back Office Accountants are a perfect fit for the job. Having worked with small, medium and large businesses across all sectors we have gained formidable experience in helping businesses level-up their AP process. Being an expert back-office accounting firm, we also provide Accounts Payable Outsourcing Services, so if you are an SMB looking for complete Accounts Payable Solution & Support for your business then you can contact us here: https://www.backofficeaccountants.com/