8 Tips to Improve Your Accounts Payable Management

There is an English proverb: "A penny saved is a penny earned". This wise quote is enough to make you think seriously about managing your company's liabilities.

You know that 82% of start-ups fail because of poor cash flow. That's why you need to seriously consider all the factors that affect your cash flow. And accounts payable is very important.

To grow your business, it's not enough to just make good profits, you have to spend every penny wisely. Otherwise, you will lose more than you earn. So manage your liabilities carefully.

Manual bookkeeping is time-consuming. You have to correct countless mistakes because people are prone to making mistakes. That's why it's wise to use modern accounts payable management software.

According to some studies, AP automation can save $16 or more, depending on the size of the company.

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

This includes these 8 tips for better accounts payable management.

How to improve your accounts payable management:

1. Healthy relationships with suppliers.

Accounts payable management depends a lot on your relationship with your suppliers. The better the relationship, the more benefits you will receive.

This collateral can help you solve a number of problems, such as urgent inventory demands, late payment deadlines, and the opportunity to take advantage of discounts and tempting offers ahead of the competition.

You should do your best to pay your suppliers on time. If you can't do that, be honest and let them know.

Also, you better be willing to find a solution to any problem that might hurt your relationship. Never hesitate to talk about a payment plan that can benefit both of you and strengthen the professional bond.

The best part is that vendors can help you expand your business network by introducing you to other influential people.

Also read:Difference Between Accounts Receivable & Accounts Payable Management

2. Use of accounts payable software

"According to Ardent Partners, 47% of accounts payable professionals consider long processing times to be a major problem".

By automating accounts payable processing and using accounts payable software, you can do away with paper. Using computer systems or mobile phones, you can handle all similar invoices and payments for your company.

You'll also have an automated purchase and payment approval process that will save you a lot of time. All lending activities will be conducted in the cloud, in a more secure environment, and easily accessible via computers or mobile phones.

Also, click to find out more about ideas to improve the accounts payable process.

This will allow your managers to monitor accounts payable activity at any time, make timely payments and make financial decisions based on the current state of the company's cash flow.

3. keep some cash in reserve.

When the financial crisis hits, it's harder to pay on time. But having some cash on hand can help and save your reputation from being undermined.

Emergencies can knock on anyone's door, so be prepared for them by having a supply of cash. Open a business savings account and gradually replenish it with cash to use in financial emergencies.

When you run out of money, this cash reserve will be your trusted companion to help you pay for things when times get tough.

4. Be ready to fight against payables fraud

Accounts payable fraud can put your business at risk. Unscrupulous suppliers or dishonest employees can play a big role.

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

To deal with such complex issues, it is better to set the system parameters in such a way as to prevent the creation of a new supplier without due diligence.

If a new supplier is to be created in the system, this should be done after obtaining full confirmation of the existence of the suppliers and the services or products received from them.

You should ensure that the creation of a new supplier in the accounts payable system is subject to several levels of validation, which will reduce the likelihood of fraud to almost zero.

5. Don't put the burden on the Chief Financial Officer (CFO)

Don't rely on the CFO to verify the authenticity of the account. This is because their heads are already full of work and they don't have enough time to collect all the cheques and check their accuracy.

In addition, if you rely on them too much, it can have a negative impact on your accounts payable management.

If you automate your accounts payable processes, you reduce the burden on them. All they have to do is check invoice amounts and sign the payment authorization.

The Accounts Payable staff must collect all invoices that need to be paid, print the cheques, and have them approved by the department managers. They should then be submitted to the Director of Finance for signature.

6. Do not pay invoices until you have received the product or service.

In a hurry or due to busyness, accounts payable managers make payments for any services or goods before they are received.

This reduces the cash flow available to your company. These situations also increase the likelihood of accounts payable fraud. Even your employees can take advantage of this negligence, accompanying dishonest vendors in order to make money.

Therefore, before making any payment, it is advisable to make sure that the delivery of the product or service ordered is not delayed.

7. pay your bills well in advance

Paying bills on time is smart, but it makes much more sense to pay your bills early. This will make a lasting impression on your salespeople.

To retain and impress you, they are always offering enticing offers and enticing discounts that will help you pay less and save more

8. Ease the burden on suppliers

To make your accounts payable more influential and efficient, you should use technology to connect with your key suppliers.

If you regularly order large volumes of goods from suppliers, it is better to connect them to your payables and inventory network through a supplier/supplier portal.

This portal will make it easier for you to track stock shipments and automate payments to suppliers.

In this way, the management of payables can be significantly simplified. You will also be able to be sure that your company has ready stock, which is very important for your company.

Let's summarize:

Your clear explanation of the importance of AP management and 8 tips on how to improve it is our goal.

These 8 tips to improve AP management include lightening the load on vendors, using state-of-the-art AP software, having healthy relationships with vendors, etc.

We also provide some statistics to help you understand how automating accounts payable management can help you save both money and time that can be invested in something actionable to improve your business performance.

Original Article Published at Invoicera.com