Top 5 Best Practices for Accounts Payable Teams in 2022
The Accounts Payable (A/P) department is an essential component of any firm that receives and pays invoices regularly. A well-functioning AP department would ensure that a company pays its invoices as soon as possible after receiving them and checking their authenticity and accuracy. However, by improving accounts, the payable department provides more than just a more efficient and dependable procedure for paying invoices. When AP runs at peak efficiency, organizations can decrease costs, enhance supplier relationships, and manage cash flow more effectively.
Inside this blog :
Any accounts payable team can use the five best practices below to increase operational efficiency.
1. Simplify your processes
The correct tools and a digital-first approach can considerably improve accounts payable operational efficiency. However, just because those measures are in place does not indicate that all inefficiencies will go. Every piece of software you use in your business is a tool. As a result, to get the most out of it, you must consider how you will utilize it.
After implementing automation software in your accounts payable operations, you need to modify your workflows to account for the new environment. Whether or not you use automation, any unnecessary or redundant step in your workflow indicates an inefficiency. Similarly, cumbersome or confusing processes and regulations will increase your error rate and make training and bringing new employees up to speed more challenging. A simplified accounts payable workflow, on the other hand, will reduce needless stages and establish a standardized structure that employees can easily follow.
2. Review your payment arrangements frequently.
Optimizing your accounts payable is more than just reorganizing your internal operations. Payment conditions agreed to when you first begin your partnership with another business may not have to remain the same in perpetuity, significantly if other features of your working relationship have altered. By automatically reviewing your terms with all suppliers every six to twelve months, you will be able to discover circumstances where achieving more favorable terms is a feasible option.
Reviewing your conditions with suppliers does not have to be as time-consuming as it may appear. If your current terms are satisfactory, you should not pursue renegotiation simply for the sake of it; however, if you maintain a relationship with a vendor for a long time.
3. Deal with late payments right away.
If your accounts payable team is doing its job correctly, you should always be aware of when payments are due. If you miss a payment deadline or know you won't be able to pay a creditor on the due date for your following cost, you must have a clear strategy.
Ignoring the situation is the worst thing you can do. If you call the account holder as soon as possible, explain the circumstances, and provide a schedule for when you expect to be able to make the payment, they are considerably more likely to be understanding.
If they must follow you down for payment and you try to avoid them, they will typically be less compassionate.
4. Invest in the proper Accounts Payable software
Purchasing the best AP solution software is probably the most vital step that any company can take to improve the efficiency of their accounts payable process. A computer can undertake most of the laborious and time-consuming administrative work required to process and check invoices significantly more efficiently than a human.
Businesses can save costs and eliminate human mistakes by automating each process. Accounts payable software can automate practically every activity in your AP operation. Automation also releases up the time of your employees. Instead of manually processing each invoice, staff can handle situations where software demands their input or detects a problem.
However, it is vital to understand that simply purchasing and installing the software will not significantly affect it. To gain the full benefits of automated solution, you must verify the configuration by proper testing. For example, just because you can digitally handle bills and pay them instantly does not mean you should. Instead, configure your accounts payable software to utilize the same criteria for prioritizing and paying invoices that you would if you were manually processing them.
5. Go paperless and have a digital-first mindset
Accounts payable software solutions can considerably enhance operational efficiency, but their value is limited because most invoices you receive remain on paper and must be digitized. Digital invoices can be issued and received very instantly, and they can be processed promptly. Requesting suppliers and other creditors to deliver their bills digitally should be a simple sell because it also benefits them.
Digitizing your internal operations also makes data collecting and analysis more accessible, allowing you to analyze your operational efficiency more quickly. Using digital workflows will increase your visibility over specific procedures, such as those in your accounts payable department and your overall business operations.
Reducing or reducing the amount of paper that departments like accounts payable must deal with can drastically save your operating costs while also improving your green credentials.
Optical character recognition (OCR)software, for example, can let you efficiently digitize any paper invoices you get. It allows you to continue accepting paper invoices and processing them as if they were digital invoices.
Following these five best practices, on the other hand, can significantly improve the effectiveness of any accounts payable department, saving time, lowering error rates, and making it simpler to discover incidents of fraud.
AP solutions can take your firm to new heights while eliminating imperfections. The most attractive features have the potential to cut invoice processing costs while also increasing employee morale. Contact Hermes- AP automation software solutions if you want the best accounts payable automation solutions and stand apart in the industry by offering your clients one-of-a-kind services.