If your accounts payable team is not adding value to your business, that’s a sign of something going wrong. In fact, good suppliers play a key role in any organization.
Paying suppliers on time don’t ruin relationships and help you negotiate better. All these will make it sense to equip your accounts payable team with technology to help streamline the work, increase efficiencies, minimize errors and analyze the payment data.
AP department is spending most of the time in doing things through time-consuming data entry and relying on outdated paper invoices & spreadsheets.
“The payment for sins can be delayed. But they can’t be avoided.” – Shawn Ryan
As your business grows, your AP department is stuck doing the same in large volumes. So, how can your AP department achieve higher levels of efficiency? Here are a few ways that help you achieve this:
Figure out saving opportunities
Streamlining end-to-end processes can cut-down the time associated with manual tasks. You have to identify risk areas such as identifying duplicate or invalid invoices. For this, one has to know what to look at when auditing invoices, how much you are spending per invoice and how to reduce the inefficiencies of spreadsheets & paper processes.
“Don’t build a glass house if you’re worried about saving money on heating.” – Philip Johnson
An invoice passes through numerous phases while processing. With no proper accounts payable system in place, this process gets slow down which ultimately prolong the overall payment process.
Small businesses can also take advantage of automated solutions due to its zero upfront costs, quick deployment and low usage fees. Automating procedures will enable your team to perform a more strategic role in the business and allows you access the data and gain insights on the deals you make. The main problem is that your accounts payable department is using outdated processes and tools that are holding your business back.
More and more, companies are receiving duplicate supplier invoices, which increase the error rate. Reportedly, around 56% of finance departments are unable to identify supplier invoice liabilities, which is a key to business process efficiency.
Count the costs
You have to calculate the annual cost of processing the number of invoices you receive. You have to consider the costs associated with duplicate payments, late payment fees and miscellaneous electronic invoices.
While spreadsheets come in handy, these are prone to error and inaccuracy. Most importantly, they don’t have built-in workflows and triggers required to keep AP processes flowing and shorten the payment cycle. In AP process, the more steps you take out of the process, the higher will be the accuracy, efficiency, and visibility you get.
If you have to ask how much it costs, you can’t afford it. – J. P. Morgan
Measure the metrics
Paying duplicate invoices is one of the most common mistakes that businesses does. AP automation helps companies avoid late payments and reduces the hidden costs associated with re-keying the data, invoices, approvals and processing the reports manually.
These metrics will help you easily identify individual supplier spend, which can be used for negotiations and allows you to integrate the data with systems so as to give a full financial picture.
Therefore, automation could help analyze spend better and negotiate discounts, which ultimately helps you in cutting off extra costs to your business.
This article is published in collaboration with SutiSoft, Inc.
Written by Rachel Smith.
The views expressed in this article are those of the author alone and not the CEOWORLD magazine