For a company to achieve and maintain healthy financial management, you’ll need to do more than control profits and resources. You’ll need to keep track of all expenses and, consequently, of the accounts payable process in its entirety.
Take the common process of payment installments, for example. Any time you choose to pay for a product or service in installments, the payment details must be registered and scheduled right away. In some cases knowing how much the company will have to pay to keep up with suppliers, partners or the government is more important than the month’s revenue overall.
You might be surprised to learn that most AP problems are not caused by a lack of funds. It is generally the result of being disorganized, which can lead to missed payments and accruing interest. Disorganized processes can also damage your relationship with partners or suppliers and cause mistrust and a bad reputation.
But, before we talk about how to take steps to avoid these problems, let’s dig into the accounts payable process as a whole.
What is the accounts payable process?
Accounts payable are the company’s financial obligations to vendors or organizations providing goods or services. Such goods and services are necessary for the company’s operation and performance. These vendor accounts must be monitored on a daily basis, as they often involve large cash exchanges. Not keeping track of them could lead to a loss for the company or issues with your corporate audit.
It’s easy to avoid interest or fines by ensuring all goods and services are paid for on time. An organized and automated accounts payable process can eliminate human error and ensure standardization among all members of your finance team.
Last but not least, when you have a standardized Accounts Payable process, you can gather important information about your cash flow and provide visibility into your overall financial management.
Why is it important to have an organized accounts payable process?
1. Time optimization
When you organize your AP process, all accounts are sorted by payment date, so all you have to do is log in and pay. In doing so, you reduce the risk of error and time spent monitoring payments and processes, allowing you to focus on more strategic tasks.
Considering that most payments these days can be made electronically, your process can be even more streamlined. By integrating your process with existing financial systems, your AP process can be fully automated. Once your new AP process is adopted, the team can easily monitor, track, pay and report on all outbound payments.
2. More opportunities to save money getting better prices
Considering that most payments these days can be made electronically, your process can be even more streamlined. By integrating your process with existing financial systems, your AP process can be fully automated. Once your new AP process is adopted, the team can easily monitor, track, pay and report on all outbound payments.
Tracking your AP metrics also presents an opportunity for dollars saved. By analyzing your processes you can evaluate which vendors are services are critical to your business, assess which are the easiest to work with and where you might be able to reduce costs.
3. Possibility of renegotiation
Sometimes there are circumstances in which you might not be able to pay for a bill or service on time. If that is the case, contact your supplier in advance and try to renegotiate the due date. This can preserve your relationship and could possibly save you some money with lower interest rates. But, without a clear line of sight into your payment process you’ll miss these opportunities.
Now that you know more about the benefits of standardization, it’s time for your company to automate your AP processes. With Pipefy for accounts payable, you can:
- Automate your accounts payable process, making sure all payments are paid on time.
- Measure each department’s expenses and draw data-based conclusions on where reductions can be made or discounts requested.
- Integrate a workflow process tool, like Pipefy, with your financial system in order to avoid manual, repetitive, error-prone tasks.
