Small Business Guide: How to Better Manage Your Accounts Payable
From the multiple financial processes that a business handles, accounts payable is one of the most crucial. As it involves the payment obligations of your company, it's an important job for any business to manage them in a timely and efficient manner. By having a good account payable process, you can avoid paying late fees, overdue charges, or penalties while maintaining your business' strong credit standing.
But since the process involves some daunting and complicated tasks, from running better cash flows to paying invoices on time. In case you're having trouble tracking your accounts payable accurately, you can follow these easy steps to help improve your process.
Centralize invoice payments
Processing too many supplier invoices? Then managing those payments in one single account would make the work easier. What you need to avoid is processing numerous payments using multiple credit cards or accounts, or on an ad hob basic. Not only it's more challenging to split those supplier invoices, but this also increases the risk of fraud. It's also best to apply this method to other company costs such as travel spending, office expenses, or extra payments you make on a daily basis.
Track your due payments
This is kind of obvious, but there are tons of companies out there who struggle in keeping track of their payments every month. To start off, you can't possibly stay on top of your due payments if you don't have an idea how much exactly you owe, when payments are due, and who you owed to. Keep in mind that this is also important for your business decision-making, budgeting, and your cash flow. To make things easier, set up a recurring payment option on your account for the regular payments you pay for every month such as website hosting fees or food supplies for the office kitchen.
This eliminates the number of payments you need to process manually and allows you to better handle the other expenses. If you're still struggling to keep track of everything, then you want to consider using an expense management software. Or, you can easily set up reminders using your calendar to receive automatic alerts for invoice due dates.
Review relationship with suppliers
Another way to better manage your accounts payable process is through checking your relationship with your current vendors. Like in any business partnership, respect for each other is crucial. By maintaining a healthy relationship with your vendors, you can potentially open up opportunities for flexibility. If you're lucky enough, the suppliers might be kind to provide you with leeway in payments.
To make this happen, you should work with your team to ensure that your accounts payable process suits your suppliers' needs. Do they need the invoices to be paid separately or in bulk payments? Do they want it in paper checks or e-payments?
Reorganize your workflow
As you know, there are multiple processes within accounts payable including selecting suppliers, reviewing contracts, invoicing, procurement, and reporting. Creating a solid structure for these processes will help you ensure that no mistakes will be made along the way. This is why it is highly recommended to reorganize and streamline your workflow if you want to manage your account payable more efficiently.
For example, you can designate a team that will thoroughly go over the terms and dates of every new contract or manages even the renewals. For your procurement, you can start by reviewing your internal buyers' workflow and purchasing habits to avoid rouge spending. As for accurate financial reporting, make sure every invoice is properly checked and matches the terms in the contract.
Outsource bookkeeping
Last but not least, you can always consider outsourcing bookkeeping services to better manage your accounts payable and other financial tasks. Not only this saves you a lot of valuable time and remove the stress, but also actually saves you money than paying full-time wages and benefits. The best part is that the offered rates for bookkeeping services are generally reasonable for the benefits you're getting.
You can maximize accuracy and minimize errors in your accounts payable process, save on operating costs and payroll, receive detailed financial reports, and experience hassle-free preparation for tax season. And let's face it, you didn't start your company because you love spending many hours allocating expenditure or filling receipts, right? CPM (corporate performance management) platforms, like onestream, will go beyond the bookkeeper for true financial analysis and keep your growth trajectory moving along.
Having an efficient accounts payable process does not only guarantee that you won't need to face expensive problems or reputational damage from unpaid dues. But it also helps maintain a good long-term relationship with your vendors, pay your invoices on time, and create stronger cash flow management. Avoid delaying payment for your bills and foster a more positive financial management within your company.