Top Ways to Improve Your Accounts Payable Process

While running a small business, you must purchase things for your organization. Many suppliers send invoices when you start purchasing from them. Inability to manage invoices can lead to paying the extra money, late payments, and a broken relationship. Hence, in order to handle corporate bills, you must take a step towards improving your accounts payable process.

AP is a challenging part of running a business. Here, we present a few steps to learn how to enhance the accounts payable workflow.

Go Paperless

Electronic bills can make the AP process easier. No need to wait on the email to get bills. Moreover, paper invoices can get lost or misplaced anytime. But online billings help you prevent making late payments due to lost hard copies. A few suppliers provide the option to receive electronic or paper invoice. You must encourage your vendors to email invoices. Provide them contact details they require to do so.

After receiving an online invoice, you can import it into your accounting solution. Moreover, you can scan and upload paper invoices into the solution, so all bills remain in the same place. Set up online payments whenever possible for daily suppliers. You require details such as contact information, account number, and the amount owed. With the help of online billing, you will be able to handle payments from your smartphone or computer. There is no need to worry about handwritten checks.

Archive Data

One of the best practices in AP process management is to monitor invoice data. Just after receiving the billing documentation, save it in an online file. It comprises of invoices, receipts, notices, and purchase orders (PO) from your suppliers. Saving these documents aids you in paying invoices appropriately. You can know when to pay bills, the amount to pay, whom to pay, and the reason for paying.

Keep these documents as a reference while answering invoices questions and filing a small business tax return.

Search for Discounts

Accounts payable process turns less stressful when owing to fewer amounts. Hence, try to search for discounts on vendors, services, and inventories you require. A few suppliers offer early payment discounts. Try to look out if your suppliers will take money off your bills for paying before the estimated date. Additionally, learn which of them charges interest and late fees so you can avoid late payments to those suppliers.

When you order a significant number of items daily, you can get a discount by purchasing in bulk. Purchasing bulk means you are ordering many items with a discount on the total. It can end up saving money in the future. Make sure that you require what you order before purchasing in bulk.

Maintain Robust Relationship

Your relationship with suppliers is a vital part of AP effectiveness. Supplier relationships can aid you through multiple situations, from requiring on the fly supplies to delaying due dates. Make sure to pay your suppliers on time. Inform your suppliers if you are unable to pay at times. Contact your supplier at the earliest when you realize you will not be able to pay within the due date to come up with a solution together like a payment plan which you both can agree.

Robust supplier relationships aid you to receive better deals on the things you require. Moreover, you can also grow your network as loyal suppliers are likely to promote you to others.

Standardize AP Workflow

Set up a standardized accounts payable solution to manage invoices from the time you get a bill to when you pay it.  Keep all your invoices in a centralized location that will help you to locate easily. Order invoices based on date and priority. For instance, arrange bills by closest due dates to the ones that are further away.

Leverage accounts payable aging report for handling invoice due dates. This report facilitates you to view which supplier payments are past due dates.

Update Contact Details

You must reach your suppliers. In order to do so, get your suppliers email address, mailing address, and phone numbers. Compile their contact details into a collective space. On the other hand, your suppliers also need to be able to reach you. Ensure that your contact details get updated for all communication channels.

Budget Expenses

Building a corporate budget can enhance the end-to-end accounts payable process by helping you to avoid making late payments. You must know what you should pay and how much you must pay. Leverage your invoices to decide how much your monthly bills add up to. Be sure that you have these funds while creating a budget. Leverage this budget and invoices’ due dates to time expenses. This way, you do not spend more than you have available.

An automated AP system is bound to improve the process, which in turn will generate revenue for the business.