As a result of an inefficient AP process, companies may accumulate late payment fees, make duplicative payments, or fail to pay invoices altogether, which will increase costs.
To help you keep your bookkeeping on track, here are 5 tips you can use to redefine and improve your accounts payable process.
1. Go paperless
While some business owners prefer having a physical copy of their records in hand, going paperless ensures that your business records are secure and that you can manage your finances more easily. Communication with vendors digitally, for example, creates a digital "paper trail" that is far more reliable than a physical one.
Start by requesting electronic invoices from all suppliers going forward to move toward a paperless AP system.
2. Utilize the Receipt Bank for the processing of invoices
A modern smart scanning technology called OCR (Object Character Recognition) has eliminated most of the headaches associated with invoice processing.
OCR technology enables you to read and extract the information from invoices you scan and upload by using the Receipt Bank mobile app. You can then export that information directly to your online accounting software.
By managing invoices with Receipt Bank, you can reduce manual data entry, mitigate transcription errors, and spend less time processing each AP document
Many small business owners use Receipt Bank as the centralized storage depot for their invoices and receipts.
3. Use Online Accounting Software to Track Invoices and Payments
Utilizing an online accounting system such as Xero or QuickBooks Online can help you better manage your invoice and payment processing.
Cloud-based bookkeeping programs make it easy to create purchase orders (POs) for every product or service you buy on the account and perform supplier invoice matching against those POs before issuing payment.
Your bookkeeper or management team can also review aging reports for outstanding AP.
3. Look for discounts
When you owe less money, the payable process becomes less stressful. You should try to find discounts on supplies, inventory, and services.
There are some vendors that offer discounts for early payments. Find out whether your vendors will deduct amounts from your bills if you pay before the due date. Also, find out which vendors charge interest or late fees and avoid paying them late.
4. Budget your expenses
Accounts payable can be improved by making a business budget and by avoiding late payments. You know what you need to pay, and how much money you have to make payments.
Find out how much your monthly bills total by looking at your invoices. When you create your business budget, be sure to include at least that amount. Time expenses based on the budget's due date and the invoice's due date. So, you don't spend more than what you have.
5. Consider Outsourcing Your AP
For busy business owners, setting up an automated AP process and managing it themselves can be challenging. A third-party accounting firm and business process provider can help in this regard.
When it comes to your accounts payable, you might benefit from outsourcing it to a bookkeeping company like Irvine Bookkeeping if:
Your company is not able to assess its performance and financial standing clearly.
It is impossible for you to improve your payables process due to a lack of expertise or time.
It is difficult to find and retain accounting talent who is experienced, reliable and will help you stay on top of your payables process.
You don't have to worry about accounting gaps anymore because we have the technology and expertise to handle any issue you may be having with accounts payable
If you, as a business owner, see that you cannot handle accounting, and accounts payable on your own, consider hiring an accountancy service for contractors to help you with it.
Call Irvine Bookkeeping now for a Free Quote!
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