How to manage accounts payable which helps to run your business smoothly?
Your organization’s account payable can have considerable effect on your general achievement. This implies you ought to follow modern business practices so as to make a mark & stay ahead.
First of all you have to pay on time to your vendors or suppliers. Late payments can result in a number of issues like:
o Negative impact on suppliers’ cash flow which may leads to –
a. Supplier Frustration
b. Broken business relationship (which may leads to less bargaining power)
c. Service disconnection (like cut off electricity supply/ water supply/ etc)
d. Increase incost of services with penalties.
o Damaged reputation & distrust which can be the reason for destruction of business as well as you may loose the trust of your suppliers, financial service providers & potential business partners.
o Inaccurate financial report which will be the reason for inappropriate cash flow & workload.
Wouldn’t it be smarter to stay away from all of these issues & rather put your business in an ideal position, so that it can be easy to take advantage of some offers like early payment discount…?
Accelerating your invoice payments yields a healthy cash flow system for your organization. But how can you accelerate your procedures such that you pay precisely & on time? Which strategies can you deploy to honor payment terms?
While in some caseslate payments are a result of company’s poor cash flow, others are unambiguously caused by poorly managed account payable process.
In this article, we’re going to focus on how to deal with the latter. Below are the some suggestions on how will you get rid of late payment penalties forever.
1. Push for an invoicing method based completely on electronic data interchange (EDI)
You already know that paper invoices take more time to process. With electronic invoices, you immediately bypass the time-wasting steps associated with paper invoices.EDI lets you and your vendors exchange documents electronically, this results in quicker cycle time, and ultimately, faster payments.
2. Tell suppliers to send accurate invoice data
The invoices with incorrect data wastes your time to figure out the details, & payment gets delayed.
It makes sense if you can get your suppliers to send precise invoice data every time. You might provide a framework that causes suppliers to always send in the complete and correct invoice data. This will help to reduce the time your team puts into processing invoices, which means your business will save employee hours and makes payments on time.
3. Schedule invoices for payment as soon as they arrive
This is very easy to get, still some accounts payable teams miss this. No needs to wait until invoices are nearly overdue before processing them. Preparing them from the get-go will only make it easiest to pay it on time.
4. Streamline internal communication
The ability to communicate in real-time boosts efficiency and create means for your team to feel comfortable sharing ideas. In any case, they should have ability to build strong relationship among themselves. This helps for faster verification of Invoices (Specially maintenance invoices) with the concerned person and results in accurate payments on time.
5. Use automated systems or mobile apps for monthly payments
You can use automated system which is an electronic network for all type of financial transactions like ACH (Automated Clearing House). It gives access to vendors to deduct actual amount as mentioned in your invoice, you just need to check whether deducted amount and invoice are verified and matching.
Latest is the mobile app, which lets you handle these tasks regardless of where you are. The ability to approve invoices from any location moves things along more quickly.
From eliminating late payments to preventing errors, automation save you time and money, as it is proven to be the best solution for Account payable teams looking to optimize how they work.
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