9 Accounts Payable Best Practices

Accounts payable is one of the many internal procedures that successful organizations are continually trying to improve. After all, no matter the size of the company, there will always be a need to pay expenses.

As a result, understanding and regularly updating accounts payable best practices is in your best interest. To help you get there, here are some tips:

1 Eliminate paper from your departments

The more your company’s operations are digitized, the less manual cash management is required. An automated invoice management system helps remove more than 80% of your manual effort by digitizing the invoice-to-pay cycle. OCR (optical character recognition), AI (artificial intelligence), and managed services should all be used in any contemporary invoicing procedure.

Audits can now be done using digital tools, eliminating the requirement for a physical paper trail. Consider converting your accounts payable staff to digital and investing in useful technologies. Technology allows for large-scale analysis and reduction of human error, as well as streamlining the approval process.

2 Automate your workflows

Accounts payable automation software will help you automate your entire accounts payable department. You can avoid manual data entry by scanning an invoice into software that will immediately begin matching it to the appropriate documentation.

3 Make sure there are no duplicate payments

Whether you use an automated payment processing system or manually check invoice numbers, it is critical to check for duplication on both sides. Consider automating your processes so that paying duplicate documents is no longer an issue.

4 Define the accounts in order of importance

To facilitate budgeting, each check run should have a cash disbursement ceiling. Invoices should always be prioritized according to their due date and payment terms.

Do not pay invoices as soon as they arrive. This can have an immediate negative impact on your operating cash flow. The processing of invoices should depend in part on when payment is due.#5) AP fraud must be eradicated.

5 Look for discounts

Find out what kind of discounts or rebates your suppliers provide for early payment of invoices. Some creditors will also reduce interest rates if you make a specific number of timely and complete payments.

Early payment reductions not only make a strategic difference without hurting your working capital, but also help your suppliers increase their liquidity by allowing them to get paid sooner.

6 Establish access restrictions and controls

Within your AP process, create a separation of duties and internal controls. To further manage which vendors are allowed, give only specified workers access to e-Doc360. It also helps you control where payments are going and detect any errors in supplier data.

For a company, every place where money is handled can be a high-risk area. To reduce the risk, always follow the rules and procedures.
Look for fake vendor accounts that can be used to commit employee fraud. Set system parameters so that people cutting checks cannot add new suppliers.

7 Payment authorization signatures

The payment authorization is usually signed by several departments. The AP automation module allows invoices to be included in an automated workflow procedure that sends an automatic notice to the person in charge of signing the document. It saves time by allowing the document to be rotated between departments.

8 Organize supplier data

Establishing a supplier portal to increase interactions with suppliers and build strong connections improves communication between the two parties, helps organize your data, and gives suppliers more control.

Everything can be stored in one place, from invoices to tax documents to payment information. Merchants can change their information at any time, and the system will update it automatically.

Another benefit of the solution is error minimization. Tax identification numbers, payment details, and address information are all validated in real time, removing the guesswork from managing vendor information. Suppliers are happier when there are fewer errors.

9 Frequently check your data

Consistent visibility into your bottom line, including accounts payable data, helps ensure that a company’s cash flow is always under control. This helps in detecting any red flags and preventing frequent bottlenecks.

Are you interested in learning more about accounts payable automation and how to develop the best solution for your business? Watch our video about AP Automation and schedule a customized demo for your business.

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