For many small business owners, accounts payable can take a backseat when compared to other business processes, such as accounts receivable. We understand that a business needs to prioritize functions that bring in capital. But with that said, there are many reasons why you should prioritize your accounts payable turnover, and it’s not simply to keep the lights on.
Your accounts payable turnover directly influences your business credit score, which can either help or hinder your ability to secure business loans later on. Moreover, redefining your accounts payable processes can help business owners improve their cash flow forecasting. A lack of process can actually cost you more in the long run, with late payment fees, accidental duplicate payments or forgotten payments. Here are some tips to help you begin redefining your AP processes.
7 ways to improve your accounts payable process
Pay on Time
Some business owners make the mistakes of delaying making payments on outstanding invoices for as long as they can to maximize free cash flow. While the logic is understandable, this is not usually the best strategy. Making payments at the last minute or even late can erode goodwill between you and your suppliers, and even cause you to incur late payments or lower your business’ credit score.
Move Towards a Paperless Environment
Although some people feel more comfortable having a physical copy of their records, going digital is just as safe and secure, and makes managing your finances far easier. Communicating with vendors digitally creates a digital “paper trail” that is more reliable than a physical one. Tools such as Xero and Quickbooks Online help to keep track of outstanding accounts payable, and offer reports that can be reviewed by the bookkeeper and management team.
Automate Payments Using Plooto
Eliminate the need for cheques by sending—and collecting—domestic and international payments digitally. Plooto allows you to automate recurring payments and integrate everything within your Xero or QuickBooks Online accounting software, saving you time, and giving you complete control to manage your bills, invoices, vendors and customers.
Reimburse Expenses Using Expensify
Digital expense reports make life easier for both your finance department and your employees. Gone are the days of gathering envelopes stuffed with crinkled receipts. Simply scan your receipts into the cloud, and reimburse through your payroll service. With all of your receipts organized in the cloud, you’ll never worry about a lost receipt again.
Take Advantage of Volume-Rebates
Consider this the Costco-strategy of inventory management: some vendors will offer cost savings for larger orders. If you’re low on storage space, it’s understandable why you can’t always take advantage of these opportunities. However, a structured inventory management process can help you identify how to best order inventory or supplies, and where you can identify savings.
Don’t Become Your Own Bottleneck
Many companies that rely exclusively on one signing authority end up bottlenecking their accounts payable processes. With payment portals like Plooto, you’re able to share signing authority with trusted team members, reducing the need to review every single payment.
Consider Outsourcing Your AP process
Feeling overwhelmed with the whole concept of reworking your AP processes? There’s a solution for that. Enkel provides business process outsourcing services for organizations looking to improve their accounting processes and save money. Let us bolster your accounting department with streamlined processes and data entry to take the burden off of your financial managers.