5 Ways to Effectively Optimise your Accounts Payable

As a business owner you must keep an eye on business' cash flow. You also must find ways to optimise account payable and receivable processes. Because, no business can survive without efficient cash flow management.

In fact, cash flow mismanagement is a major cause of the demise of newly started companies. You ought to update your books consistently to have a clear understanding of the flow of cash in and out of your business.

You must have a dependable accounts payable process to handle supplier invoices. It should be capable of routing these invoices for accurate and timely processing. It should not delay the payments as it results in slow delivery times. Nor should it go after the discounts on early payments if it hurts the working capital. Let us see a few ways to optimise your accounts payable process.

Ways to Optimise Your Accounts Payable Process

Online Portal for Suppliers

Your priority is to track invoices and shorten the invoices approval cycle. You can streamline both these tasks by building a One-Stop portal for suppliers.

It simplifies order tracking, deliveries, due dates, and payment amounts. You can also manage your working capital efficiently by:

• Involving the deciding authority in the payment processing
• Ask for discounts on the order volume or low prices
• Update vendor contract to industry-standards

Automate & Optimise Accounts Payable System

Implement or switch to the latest accounting software to automate and optimise accounts payable system. It will speed up the payments and give insights into your cash flow.

Doing so helps reduce your workload and the manual work that goes into handling documents and payments.

You can use the software to prepare and analyse your financial reports like due payments, invoice ageing, estimates, purchase order, tax amounts, etc. It helps you reduce the invoice processing cost.

Match Invoices to Purchase Orders

You need a strong accounts payable process to manage your outgoing cash. You must be prompt in paying your suppliers to have a strong and profitable relationship with them.

After your business grows to have hundreds of suppliers, tracking invoices becomes tricky and time-consuming. You can overcome the difficulty by:

• Validating invoices against the purchase orders
• Issuing a purchase order for every order, comparing them and approving the payment
• Looking for discounts on payments, rebates on large volume, or trade initiatives
• Preparing ageing accounts payable report and finding out each of your vendor's outstanding payments
• Being clear about the accounts payable goals

Create Custom Workflows

The custom workflow clarifies what the staff responsible for accounts payable does and how it executes the operations. They describe how the staff treats the invoices, and the transaction data is recorded and shared.

These workflows also detail the invoice approval process. They also give guidelines for ascertaining the right ways of paying different suppliers. The custom workflows handle issues like:

• Checking whether or not suppliers and company honouring the contract
• Discounts for payments after a certain period
• Suppliers are not missing the delivery dates

All this information helps streamline the work. It is why custom workflows are necessary to Optimise account payable. They enable the company to avoid penalties for late payments and help get discounts by paying on time.

Invoicing and Reporting

Updating your books regularly gives you the latest accounts payable status. And the automation enables you optimise accounts payable process. It also gives you a chance to generate real-time reports. You can further make the process more effective by:

• Tracking all the payments
• Choosing the payment method
• Comparing invoices against the purchase order
• Check invoices sent by suppliers against the contract

Keeping an eye on accounts payable is a time-consuming and hectic task. However, implementing the latest accounting software enable you to Optimise account payable. A glitch-less accounts payable process helps you discharge liability towards your suppliers on time and keep the relationship with them professional and cordial.