Using AP automation software to optimize the account payable process allows for more accurate financial reporting, boosts the efficiency and effectiveness of your company's operations, and improves compliance with laws and regulations.
Fremont, CA: You can avoid financing shortages, boost your company's liquidity, and increase earnings by optimizing your accounts payable. Read on for eight techniques to optimize your accounts payable to keep your firm on track.
1. Mitigate Account Payable Fraud
You are exposed to copy as long as you are handling money. Suppliers, staff, and cybercriminals are all potential fraud sources. For example, hackers might imitate your supplier email addresses and demand payment from different accounts, and your workers could create dummy supplier accounts.
2. Use Paperless Automation Solutions
Adopting paperless AP automation software is one of the most effective ways to improve your company's account payable process. Paper invoices are often misplaced, leading to guessing, late payments, and lost time. They also use up valuable filling space.
3. Set KPIs to Measure the AP’s Efficiency
To improve the AP department's performance, set clear, measurable targets. You may determine the performance of ongoing processes, make adjustments as needed, and inform staff about your goals by developing realistic KPIs. The following are some of the most common key performance indicators for accounts payable: Rate of payment accuracy Days payable outstanding(DPO) Acceptance of the early payment discount Invoice processing costs Acceptance of electronic payment methods Time spent resolving disagreements with suppliers or vendors
4. Create Reminders for Payments
Set up recurring payment reminders Managing payments with various due dates can be difficult, so use calendar reminders to help with the payables process. Invest in account payable systems with built-in reminders that sync with your calendars, then enter the payment information and due date to receive alerts. This helps you stay on track with your payments and preserve goodwill with your vendors.
5. Set up a Supplier Portal
Be sure to create a centralized site for your vendors and suppliers so that they can track delivery dates, order status, receive payments, and potential product shortages electronically. This lowers manual errors, increases order accuracy, saves invoice approval time, and delivers critical business insights for decision-making.
6. Create an Emergency Reserve Fund
An emergency reserve fund is critical to your accounts payable process and timely payments to your vendors and suppliers. It would help to keep a cash reserve to plan for unanticipated events or rainy days, such as a drop in sales volume for a few months or a piece of office equipment breaking down. It ensures that your company stays financially sound regardless of the state of the economy.
