Most businesses would not be able to run as effectively if the accounts payable process wasn’t putting in the hours. One of the most important responsibilities of an accounts payable department is ensuring that payments happen systematically and cash flow is managed well within the organization.
However, the accounts payable department can be one where employees have to go through time-consuming and intensive work. Approvals are an integral part of the process, and most companies do want to know how to optimize accounts payable.
What Are Accounts Payable?
If you are shopping for an item and purchase it on credit, then the amount you owe for this is known as accounts payable. When it comes to organizations, suppliers or service providers may be bringing in products or materials. The money owed to them for these services or inventory is known as accounts payable and is considered a liability to the company that needs to be paid.
There is usually a specific time frame attached to making payments, and a late fee or penalty can be levied by the suppliers or vendors if the amount is not paid within the time frame that as agreed upon.
A Modern Accounts Payable Process Involves the Following Steps:
- Create an accounts chart where companies that work with the organization are listed
- Vendor details are set up, and this can be done in an automated accounts payable process such as Easy Access AP. This may include details about how long vendors will give the organization to make payments on a monthly basis.
- Once an invoice is received, bill details are entered, and the accounts payable team verifies if the product has been received or service has been taken up, accordingly.
- Finally if there are any payments due, then the AP team needs to use the accounts payable automation software needs to conduct reviews.
5 Best Strategies for Optimizing Your Accounts Payable
- Real-Time Approvals: One way in which accounts payable teams can ensure that every stakeholder knows about the payment process and when payments are supposed to come in is by using automated AP software. Organizations can use applications such as Easy Access AP where invoices are captured and routed in a secure manner. If employees in the AP team and other stakeholders are aware of how the invoices move through the system, then the process will be streamlined.
- Increase Visibility of Cash Flow: The most important part of managing accounts payable is managing the different cash flow processes for the organization. If there is clear visibility in the AP automation, then the organization can get clear insights into the state of cash flow.
- Reduce Errors: Manual AP processes can have greater chances of errors since the team members would have to enter data and make sure that documents are in the right order. There may also be chances of duplication of invoices that happen thanks to the huge number of invoices that enter the system. But if your company can modernize Accounts Payable department processes
- Keep Transparency: Some businesses may have already automated other processes for a smooth workflow. When the financial departments of the company integrate with advanced AP automation software, critical data can be extracted. This enables the company and its stakeholders to have a clear forecast on where the company is headed and what strategies it needs to use.
- Digitization: Incoming data may be unstructured, and this can be turned into structured information for ensuring that smooth processes can be taken up. Manual invoice processes are replaced by accounts payable optimization, and a good example of this is using Easy Access AP software. This can lead to enhancing the performance of the AP team because costs are reduced and regulatory compliance can be gained as well.
These are just a few advantages that your organization can have by modernizing accounts payable departments. Employees would have to put in minimal efforts, and the automated AP software would help streamline processes across the board.