7 ways to increase your accounts payable efficiency
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Published: 9th September 2018
If you are a business owner, you may find yourself playing an almost never-ending game of catch-up. While attending to the stress related to ensuring your clients have a positive experience, you also have to handle accounts payable issues. This includes all the problems that can occur at the backend of your business, such as inventory issues, missing payments from your vendors, duplicate invoices and more.
The good news is, there are some ways you can improve your accounting processes. Use the tips here to make sure your accounts payable are handled and that they run on auto-pilot.
1. Build a Great Relationship with Your Suppliers
I believe one of the most important ways to improve efficiency is to build and maintain great relationships with your suppliers. Sometimes, it is possible that you are not able to make a payment to your supplier by the due date. If you have a good relationship, you may be able to negotiate a deferred payment but still receive the goods or service you need.
After all, you need to make sure you are still getting the goods and services you need. The best way is by clearly explaining the situation to the supplier – before the issue escalates to a non-payment or late payment issue.
2. Simplify Your Process
Sometimes, as a business grows, we keep doing things the way we always have. It may have worked when you had to pay 2 suppliers each month – but what if you now have to manage dozens of suppliers? You may be doing things right now that further complicate your accounts payable? For example, if you pay with a paper cheque and forget to record it right away, your books may become mismanaged and result in issues down the road. Or if you pay suppliers from your mobile banking app without the required paperwork.
If you want to simplify your accounts payable, there are a few things you can do:
- Record payments as they come in
- Keep a digital record of what is owed, when bills are due, etc. that key employees have access to
- Reconcile your accounts payable every day (or designate someone to do this)
One of the worst things you can do is get behind. Every valid invoice you receive will need to be paid, and I recommend handling them as soon as they come in, and pay them a couple of days before the due date. By doing this, you can ensure you don’t get behind and that your process is easier to handle.
Author:
Chris Dwyer
Payment System Architect
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3. Be Consistent
I encourage you to shop around and look for solutions, providers and partners. But, once you have found something that works for you, stick with it for at least 6 months. After 6 months, review it and see if you can improve your use of it. Too many changes in a business reduces your efficiency. So be open to change, but also stick with something that is working for you.
4. Use Technology
During the past 5 years, technology for accounting system has moved from being enclosed within the 4 walls of your accounting department, to being fully accessible 24/7 from anywhere – including your mobile phone. However, just because it is possible – doesn’t mean you are using it, or even that you should use it.
Spend some time reviewing exactly what you need when it come to an accounting system. Do you need payroll? Do you need international payments? How many invoices per month do you process? Do you want automatic bank feeds? (Hint: Yes, you do want automatic bank feeds).
Try and go paperless as much as possible. Sign up to receive your supplier invoices via email, and then import those invoices into your accounts payable system. As long as you have a secure backup of your invoices, you have no need to print a hard copy.
By using technology to assist your accounts payable process, you most certainly will reduce the time taken to manage, process and reconcile your accounts.
Never be afraid of asking your suppliers for something new. You never know, they might already have it – it is just that you are not using it. For example, if you need to pay an overseas supplier, you could simply email your PDF invoice to Instant Global Payments and their AI engine will create a payment for you an settle the invoice. It’s these sort of things that can save time, improve accuracy and make the entire process less stressful.
5. Understand the Importance of Your Accounts Payable
Unfortunately, some businesses downplay the importance of their accounts payable. However, if you fail to pay your suppliers and vendors, you won’t have the items that you need or be able to adequately take care of your clients. With the proper accounts payable management system in place (see the point above), you can easily improve the overall efficiency of your business and save money. This leads to a much higher chance of success.
6. Always Monitor Important Metrics
When you have an effective accounts payable process in place, you can trace everything. This includes agreements with suppliers, terms of contracts and discounts. This ensures that everyone is living up to there own duties and promises. As mentioned before, technology has come a long way in recent years when it comes to accounts payable. It is quite easy to produce a set of Key Performance Indicators (KPI) so that you can monitor each supplier’s performance. By keeping track of this important information about your business, you will have the ability to better manage your cash flow while addressing issues with vendors or your accounts payable processes.
With a quality accounts payable system in use, you will make it easy for everyone in your business to gather information about payments, suppliers, the payment terms with suppliers and more information from any device. With an automated system in place, you can also reduce issues related to redundant invoices, and other problems.
7. Create Reminders
When it comes to getting organized at your business, you need to make sure you know when things are due. Allowing payments and invoices to “slip through the cracks,” is one of the worst things you could do. Even if you do not use an online accounting system, you need to make sure that you have some way of knowing who to pay, when to pay and how much to pay. With the right automation software, you can set up reminder and easily take care of vendor payments and other bills before they are due. You will also be able to anticipate payments coming up.
Choosing the right provider
Regardless of which bank details you are given; Instant Global Payments can help you send money to Australia. We pride ourselves on giving our customers world-class exchange rates, we challenge you to compare the exchange rate we offer you to your current provider, we are confident that we will be offering you a better rate.
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