Streamline Your Accounts Payable Process Today

In today's fast-paced business world, making the accounts payable (AP) process better is key. It helps improve efficiency, cut costs, and manage cash flow better. But what if your AP team is still using old, manual ways? Could updating your approach unlock new potential and give your business an edge?

Key Takeaways:

• About 33% of AP departments still use paper checks, which costs almost $5 per check.
• Switching to electronic payments can make the AP process more efficient and cheaper.
• The AP department is vital for a business's cash flow. It affects profits, growth, and competitiveness.
• Using AP automation ensures all invoices are stored digitally, easy to access, and linked to the ERP system.
• Setting clear AP KPIs can improve cash flow and help in making strategic decisions.

Embrace Electronic Payments for Efficiency

Switching to electronic payments can make things run smoother and save money in accounts payable. Electronic payments are quicker, cheaper, and safer than paper checks. They also come with perks like cash back and better tracking for both the company and its suppliers. Plus, electronic payment options work well with AP automation, making the whole process smoother.

Benefits of Electronic Payment Methods

Automated digital tools speed up work, offering early payment discounts and insights into cash flow. They help in making smart decisions and preventing fraud. With automated Accounts Payable, answers to management questions go from weeks to minutes. Using supplier networks for data makes payment fraud less likely.

Overcoming Supplier Resistance to ePayments

Many think suppliers don't want digital payments, but the real issue is customers not moving past checks. By sharing the perks of electronic payments with suppliers and making the switch easy, companies can get more suppliers on board with ePayment methods.

“Adaptation to new technologies and managing fraud risks are crucial for Accounts Payable teams to satisfy a broad range of stakeholders.”

Standardize Your Accounts Payable Workflow

Standardizing the accounts payable workflow is key to boosting efficiency and cutting down on waste. It means creating a clear system for handling invoices from start to finish. This includes processing invoices in one place, following the same approval steps, and linking it with the company's ERP system. Having one department handle AP across different locations helps avoid messy processes and makes sure invoices are treated the same way everywhere.

Centralize Invoice Processing and Payments

Putting all invoices in one digital spot makes it easy for the AP team to find and sort them by importance and date. An automation tool keeps invoices safe, reachable, and in sync with the ERP system. This gives a full audit trail of AP actions and solves the problems of dealing with paper invoices.

Leverage Digital Invoice Storage

Switching to a paperless AP setup with digital invoice management tools can make the AP workflow much smoother. Storing digital invoices in one place lets the AP team work faster, cutting down the time and effort for invoice processing and payment processing. It also makes data accuracy and visibility into the AP process better.

“Automation of accounts payable workflow can lead to significant time savings and efficiency gains.”

Having a well-organized, centralized AP system with ERP integration and digital invoice storage gives businesses better control, transparency, and a clear audit trail in their accounts payable work.

Strengthen Vendor Relationships

Building strong vendor relationships is key to business success. By making your accounts payable process smoother, you can pay suppliers on time and accurately. This strengthens these important partnerships. Late or incorrect payments can slow down the flow of goods and services, hurting your vendor relationships.

Importance of Prompt Supplier Payments

For vendors, getting paid quickly is a big deal. In fact, 84% of them see prompt payments as the most important thing, as per the 2022 State of AP Report. Paying your suppliers on time builds trust and gets you better deals on what you need for your business. Plus, paying early can save you 1% to 3% of the invoice total, adding up to big savings over time.

Using vendor portals and self-service platforms makes talking to suppliers easier, easing the workload for your accounts payable team. By looking at the data from your accounts payable systems, you can learn a lot about payment trends and how you interact with suppliers. This helps you make your vendor relationships even stronger.

“Supplier relationships directly impact an organization's ability to create value, affecting factors such as cost, efficiency, and risk.”

Putting effort into following compliance and regulations can also keep your supplier relationships strong, especially in fields like healthcare. By making your accounts payable process more efficient and using automation, you can make sure you pay promptly and get early payment discounts. This makes your vendor relationships stronger and helps you get better deals for your business.

Leverage Accounts Payable Automation

Automating accounts payable changes the game for businesses wanting to make things run smoother. AP automation solutions use OCR, AI, and managed services to turn the whole invoice-to-pay process digital. This can cut down manual data entry by over 80%, make approvals faster, and give real-time updates on the AP process.

With AP automation, businesses can grow their supplier relationships without hiring more people. They can also lower the chance of mistakes and fraud. The key benefits include better efficiency, improved cash flow, and faster business growth. Many AP automation tools also have portals for vendors, making it easier for them to talk to the AP team.

“89% of senior leaders are ‘very interested' in the potential for AI automation in accounts payable processes.”

To get the most out of AP automation, pick a solution that fits your company's needs. Look for AI tools that are easy to use, have good communication, offer 100% approval confidence, and give consistent results. With the right AP automation plan, businesses can make their accounts payable process better, manage cash flow better, and focus on growing.

Measure Against Key Accounts Payable KPIs

Seeing AP metrics and AP KPIs often is key for better cash flow and smart business choices. Important things to watch include invoice volume, payment speed, discount capture, error rates, and how much is spent by payment methods. By setting clear AP KPIs and using advanced AP reporting and AP analytics, companies can spot problems, boost cash flow analysis, and cut down on fraud detection and audit trail risks.

Important AP Metrics to Track

Small and mid-size businesses often track KPIs like cost per invoice, invoice processing time, average approval time, and more. These include invoices processed per employee, number of invoices processed with a purchase order, invoice exception rate, percentage of discounts taken, and invoices managed with straight-through processing. You can find more about this at AP.

Benefits of Advanced Reporting and Analytics

Using advanced AP reporting and AP analytics in an AP automation solution offers more than just basic KPI tracking. It helps businesses spot risk and fraud detection, find trends in their AP processes, and plan better for cash flow analysis. It also makes sure there's a full audit trail of all accounts payable activities. This lets finance teams make smarter, data-based choices about AP and cash management.

“Consistent visibility into accounts payable data is crucial for optimizing cash flow and making strategic business decisions.”

Optimize Your Payment Mix

Businesses are working to make their accounts payable (AP) processes better. They're moving away from paper checks to faster electronic payment options. This change is key to saving time and money.

Using a mix of payment methods, like ACH, wire transfers, and virtual cards, can cut costs and boost efficiency. These electronic payments are quicker, cheaper, and safer than check payments.

Automating payments makes the AP process smoother. It helps companies get early payment discounts. Studies show that electronic payments now make up 60% of B2B transactions, the highest level since 2010. Yet, 40% of payments are still done the old-fashioned way, showing there's room to grow.

Optimizing the payment mix helps reduce check payments and use the perks of electronic payments. These include better control over when payments are made, cash-back rebates, and improved remittance data. This smart approach to AP optimization can lead to cost savings, better efficiency, and stronger vendor relationships.

Accounts Payable Process Overview

The accounts payable process covers everything from getting invoices to paying vendors. It starts with a purchase order and ends with the payment being recorded. Important steps include capturing invoices, getting approvals, and making payments.

Knowing the full process helps improve cash flow and vendor relationships. It also helps streamline workflows.

Understanding the Accounts Payable Cycle

Accounts payable (AP) is the money a company owes to its suppliers for goods or services bought on credit. Managing AP well can save time and money. It's important to have a debit and credit for every entry in the ledger.

Not managing AP well can lead to late payments and missed discounts.

AP is listed on a company's balance sheet as a current liability. Changes in AP affect the cash flow statement. If AP goes up, the company is buying more on credit.

Following AP compliance rules is key. It ensures payments follow laws, policies, and regulations.

Conclusion

Improving the accounts payable process is key for businesses that want to grow. Using electronic payments, setting clear workflows, and building strong vendor relationships helps. Automation and tracking key AP metrics also play a big role.

These steps make the process more efficient, cut costs, and help manage cash better. By following these best practices, finance teams can make smarter decisions. This helps the business succeed over time.

Handling accounts payable well means following the rules and understanding your company's finances. It helps manage cash flow, keeps supplier relationships strong, and boosts financial stability. This approach to accounts payable best practices, AP optimization, workflow efficiency, vendor relationships, and cash flow management helps businesses do well in a tough market.

For businesses looking to improve their finances, a well-organized accounts payable function is vital. By using the strategies shared here, finance teams can make their AP processes better. This leads to better performance, more compliance, and stronger partnerships with suppliers. It's good for the company's long-term success.