8 Expert Tips to Improve Accounts Payable Management

A penny kept is a penny earned" is an English proverb. This thoughtful quote is enough to make you take the management of your company's accounts payable more seriously.

You should know that 82% of start-ups fail because of poor cash flow. Therefore, you should seriously consider all the factors that affect your cash flow. And accounts payable is one of the most important.

To grow your business, it is not enough to make handsome profits, but you must spend every penny wisely. If you don't, you will lose more than your profits. Therefore, manage your accounts payable carefully.

Manual handling of accounts payable consumes a great deal of time, as you have to correct innumerable mistakes, as humans are prone to errors. Therefore, opting for advanced accounts payable management software is a wise move.

According to some research, accounts receivable automation can help you save $16 or more, which depends on the size of your business.

Therefore, moving to advanced technology for proper accounts payable management is prudent and necessary for the growth and sustainability of your business.

To this end, we will let you know 8 tips to improve your accounts payable management. Let's get to know them one by one.

How to improve your accounts payable management:

1. Healthy relationships with suppliers

The management of your accounts payable depends to a large extent on your supplier relationships.

This can help you with many issues, such as needing supplies immediately, getting due dates pushed back, and being able to take advantage of discounts and tempting offers before your competitors.

You should make every effort to pay your suppliers on time. If you cannot do this, be open and inform them.

In addition, you had better be prepared to find a solution to any problems that might damage your relationship.

Best of all, your suppliers can help you expand your business network by introducing you to other influencers.

2. Pay invoices early

It is wise to pay invoices on time, but it is much wiser to pay them early. By doing so, you will leave a different and lasting impression on your suppliers.

To keep you retained & delighted, they will always offer tempting offers and enticing discounts, which can help you pay less and save more.

3. Keep some cash in reserve

When financial crises hit, you find it harder to make payments on time. But having cash in reserve can help you do so, preventing your reputation from being damaged.

An emergency can knock on anyone's door, so be prepared for it by having a cash reserve. Open a business savings account and fill it with money little by little to use in case of a financial emergency.

4. Be prepared to deal with accounts payable fraud

Many unknown suppliers have been created in an accounts payable system, and companies pay these fake suppliers who have not provided or have never provided any services or products to the company.

To deal with these complicated problems, it is best to establish system parameters that do not allow the creation of any new suppliers without due diligence.

If the creation of a new supplier is required in the system, then everything should be done after full proof of the suppliers' existence and the services or products taken from them.

It should be ensured that creating a new supplier in the accounts payable system should be carried out having multiple levels of approval, which will keep the chances of fraud almost nil.

5. Don't put a burden on your CFO

Don't expect CFO to check the authenticity of an invoice. It's because their mind is already full of workload; they don't have enough time to gather all the cheques and verify their accuracy.

In addition, relying on them heavily can negatively affect your accounts payable management. Therefore account payable software is a perfect option to put your accounts payable process in auto mode.

If you automate your accounts payable processes with accounts payable management software, you can reduce their workload. All they have to do is check invoice amounts and sign the payment release.

Your accounts payable team is required to collect all the invoices to be paid and have the department heads print and approve the cheques. After that, they should be placed before your finance director for signature.

6. Not paying invoices before receiving the product or service.

Due to rush or workload, accounts payable department heads make payment for any service or product before it is received.

This decreases your company's cash on hand. Moreover, the chances of accounts payable fraud are higher in these situations.

Therefore, before releasing any payment, it is prudent to ensure that delivery of the requested product or service is not outstanding.

7. Use account payable software

According to Ardent Partners, 47% of accounts payable professionals consider processing time to be their biggest challenge.

When you automate the accounts payable process by adopting account payable software, you eliminate paper. In addition, you will be able to manage all of your company's analogue invoices and payment activities via computer systems or mobile phones.

In addition, you will also have the entire purchase and payment approval process automated, which will save you a lot of time. All your accounts payable activity will be cloud-based, more secure and easily accessible via computers or mobile phones. In addition, click to learn more about accounts payable process improvement ideas.

This will allow your managers to monitor their accounts payable activities at any time, pay on time and make financial decisions taking into account the current condition of the company's cash flow.

8. Ease the burden on your suppliers

To make your accounts payable more influential & efficient, you must rely on technology to connect with your key suppliers.

If you need to routinely order bulk purchases from your suppliers, it is best to connect them to your accounts payable and inventory network through a supplier/vendor portal.

This portal will help you to track inventory supplies and automate payments to your suppliers.

In this way, your accounts payable management can be greatly simplified. It will also ensure that your company has a ready supply of inventory, which is very important for your business.

Choose customised accounts payable management software today!

Let's wrap it all up:

Our purpose is for you to clearly interpret the importance of accounts payable management and the 8 tips to improve it.

These 8 tips to improve accounts payable management include alleviating the burden on suppliers, using state-of-the-art accounts payable software, healthy supplier relationships, etc.

We also provide you with some statistics to give you an idea of how automating accounts payable management with accounts payable management software can help you save both money and time, which you can invest in something achievable for the betterment of your business.