Your accounts payable process can make or break your business. If you can manage your payments well, your business can shine and excel at cash flow predictions. If you can’t, your supplier relationships can suffer, or you can even run out of cash.
Here are 7 ways to optimize your accounts payable cycle for better results.
1. Go Paperless
A typical accounts department receives 57% of invoices as loose pieces of paper. In addition, 54% of businesses say their invoices are sent to the wrong destination, according to the Accounts Payable Association (AP).
Paper processes do not suit today’s time. From missed payments to loss of productivity, you can put a lot at stake by relying on paper invoices and spreadsheets.
The time has come to shift to modern alternatives like a spend management tool for better efficiency.
2. Track Everything Instantly
Waiting for the end of the month to record your expenses is not ideal. It makes you lose visibility and control of your financials. Therefore, you should record every account payable transaction on the spot.
Modern spend management tools can automate tracking and data entry. You can take screenshots of your receipts and directly upload the files from your mobile. Expense management tools can extract data from screenshots and record the numbers in the right places.
As a result, you stay on top of every dollar leaving your company.
3. Automate Invoice Management
A business spends $12 to $30 on average to process an invoice. In addition, it can take up to 30-minutes of your accountant’s time. We’re guessing that’s not the way you should take your business forward!
Switch to invoice automation to reduce accounts payable process costs. You can also speed up your accounts payable cycles by eliminating manual invoice matching.
In addition, automation will help your accountants save time and effort. They can use their conserved hours to grow your business and profitability.
4. Eliminate Manual Data Entry
The traditional accounts payable process requires accountants to enter data in books manually. The process extends your payment cycles and also leads to inaccuracies. No wonder 90% of businesses receive calls from suppliers to chase payments, as per AP.
What to do:
- You need to cut out manual data entry to achieve 100% data accuracy.
- Use an automated tool for timely payments and record data in real-time.
5. Streamline Approvals
Approvals can take a long time as your invoices shift from one person to another. Naturally, 36% of businesses are concerned about late payments caused by processing delays, according to AP.
You should try to streamline your approvals by setting clear expense policies. In addition, use features like pre-approvals and spending limits in your payment management tool. You can also put approvals on auto mode for recurring expenses to avoid late payment charges.
Moreover, digitization can even let you issue approvals in seconds.
6. Get Proactive to Detect Frauds
According to the Association of Certified Fraud Examiners (ACFE) survey, 90% of participants expect fraud to increase in 2021.
Businesses fall prey to fraud in many ways. However, the two most common methods are billing and check tampering, as per ACFE.
Plus, employees may also claim false expenses that miss your accountant’s eyes.
What to do:
- Avoid paper checks and pay digitally
- Make payments from a single account or card
- Remind employees to submit receipts
- Back up every expense with proof
7. Develop Real-Time Visibility
Do you want to keep track of every cent of your budget?
Businesses with real-time visibility into their accounts payable process are more likely to excel. You can be aware of each expense and optimize your budget. The process also helps you unearth unnecessary or redundant costs that bring no value.
A payment management tool can help businesses get a real-time view of their payments. You can also dive deep into each transaction and dig up granular details.
Additionally, you always have real-time data to make informed financial decisions.
Businesses need to adopt a digital approach to improve their accounts payable process. You should also automate receipt management and data entry to enjoy maximum accuracy. Adopt automation today to centralize your payments and pay your suppliers on time.