How To Streamline Your Accounts Payable Management In 2022 & Beyond
Updated: Apr 28
Let’s cut to the chase - do you want full transparency of the cash flow in your business? Do you want to minimise inefficiencies and maximise on a centralised system for the finances in your company?
We’ve got you covered.
Let’s take a look at how you can streamline your accounts payable management and run your finance division like a brand new motorcycle - well-oiled and ready to get you to where you need to go.
Accounts payable management is an important part of every organisation's financial operations.
The amount of time and money spent on accounts payable management could have a major impact on your success. Luckily, there are a number of ways to streamline this process.
Follow this guide to help you implement more effective accounts payable management.
What is Accounts Payable Management?
Simply put, accounts payable management keeps track of all the money that has been paid by your business, or all the cash still owed to vendors and suppliers. It also includes tracking payments made to employees, contractors, and other third parties.
So basically, accounts payable management keeps a record of all the money going out.
What is the Purpose of Accounts Payable Management?
Keeping track of payments isn’t the only purpose it serves; accounts payable management also ensures that invoices are paid on time, that the correct amount is paid, and it helps to avoid late fees, penalties, and interest charges.
If you don't have a good system for handling your accounts payable, it’s pretty easy for errors to occur and money to get lost in translation. Without proper AP management in place, you may not always know where your money goes, how much you still owe, or when you need to pay an external party.
Seven Strategies To Optimise Accounts Payable Management
Here’s a handy list of the best practices to use to streamline the AP Management process.
1. Centralise Accounts Payable
One of the best ways to improve your accounts payable system is to centralise it. This means having one central place where you can see everything related to your accounts payable.
This can be done through a dedicated AP software solution. This allows you to manage multiple processes from one location - making it a lot easier to stay on top of everything.
If you’re manually filing invoices in different places, not only is it time-consuming, but it can be tricky to keep up with each one, and having hardcopies takes up unnecessary space.
Want a nifty solution? Use an AP tool that will help to create new customers, make purchases, generate reports, and more.
2. Automate To Dominate
Automation is the best way to save time and cut down on manual AP tasks. Instead of updating your spreadsheets manually and spending hours inputting data, you can use software that does this for you automatically.
With automation, you can also set up rules that trigger certain actions based on specific criteria. You could automate recurring tasks. For example, you could schedule a task to run every month, which would send all unpaid invoices to be paid automatically.
It also removes the possibility of any oversights occurring due to human error - so you have peace of mind that your data is captured accurately.
3. Strong Governance Practices
In order to run a successful business, you must adopt strong governance practices. This means following certain guidelines that will protect your business from fraud, theft, and mismanagement.
For example, if you're using accounting software, you can set up internal controls such as access permissions, user roles, and security levels within the software. These settings stop any Mr Robot situations happening by preventing unauthorised users from accessing sensitive information.
4. Go Paperless
Paper documents take up space and they often get misplaced. With digital files, you can store all of your financial data online. Plus, you won't have to worry about losing any records because they're stored safely in the cloud.
Going paperless also allows you to access AP documents from anywhere, anytime. This is essential for remote work and more efficient AP management.
5. Implement Purchasing Approval
Purchasing approval allows you to arrange payments before they happen. Implementing this helps to avoid paying late fees, and it gives you full control over your cash flow. Another benefit is that you can reduce the amount of interest that you pay on outstanding bills.
6. Supplier Portals
A supplier portal is an online tool used to connect with suppliers. Basically, it’s an online portal that focuses on connecting buyers with sellers. A great feature of this tool is that suppliers can track and run progress reports, so they don’t need to bug you for updates. That’s a win.
You can use supplier portals to include updates on product shortages, delivery schedules, order statuses, payments received, and more. This is a great way to improve the overall vendor experience.
7. Capture Invoices Small, Pay Them in Large Batches
When you receive invoices from vendors, you'll want to make sure that you capture them as soon as possible. This will help you keep track of when each invoice was paid, and it will allow you to calculate your payment terms accurately.
After capturing the invoice, you'll want to create a batch job so that you can process multiple invoices at once. If you don't do this, you may end up paying too much interest on overdue invoices. Paying invoices in large batches is the easiest and most efficient way to manage your AP payments.
Managing accounts payable can involve many different processes. It’s essential to get this right to maintain a healthy cash flow and keep your finances on track. This is why the right AP tool should be used.
By following the strategies above, you will be able to streamline your AP management, saving you valuable time and resources, and help you grow and manage your business the smart way.