Accounts payable is a bill to be paid or the money owed to a creditor.
But first, let me ask you a question.
Who wouldn’t love the idea of cutting costs but also spending wisely?
Everyone right?
Managing accounts payable and receivables can help you with this idea.
A real-world example of account payable is the electricity we use and the bill is generated at the end of the month. The services are provided to us and the provider sends us the bill after that, which needs to be paid. In this article, we talk about accounts payable.
Managing accounts payable is easy once you get a hold of it. You have to be very clear in deciding when to pay early and when to extend payables. Both have some pros and cons. Paying early can sometimes get you benefits specifically provided to early payers. But, paying late can cause a lot of issues like slower delivery times and slower responses to queries.
To have a better look at it, we must have a more organized and strategic approach towards accounts payable. Optimizing the accounts payable process can help you produce more benefits and a smoother cash flow. All this will result in the ultimate goal of any business which is higher profits.
We believe every business should have a strategy that works for them. Here are some effective practices for managing account payables that you should follow.
We all know using paper as a document is risky as it can be easily lost. Accept electronic invoices. People who use electronic data interchange systems have many benefits. You can generate purchase orders, accept invoices, and track goods received. You can also solve other issues related to the supply of goods which is better than dealing with it physically.
Using Purchase Order
A purchase order is a document that acts as a binding contract between a buyer and the seller. It includes
company details, shipping details, order information, and even the performance of the shipment. Accounts payable departments use PO as it increases the efficiency of any purchasebeing made. If the product being delivered is not up to the mark, the purchasing organization has a legal record of what was expected.
If a supplier changes prices between the date of the order and the date of delivery, a purchase order can clear the agreed-upon price to avoid any miscommunication. Create your purchase order with us.
Supplier Satisfaction
The supplier should always feel that you are the most compatible customer they will ever get to work with. Create portals for them where they can track their orders and check the position of their goods.
Workflow management
To improve the efficiency of your accounts payable process, you need to have strong workflow management. Better workflow gives you better insight into your processes. Managing your workflow can help in eliminating redundant processes. Eliminating such processes will automatically make your business perform better.
Centralized Accounts Payable System
Operating business from different locations and then paying various vendors and service providers at every location is common. But this can result in a waste of time and resources. A centralized system will increase efficiency and productivity which will save time and money.
Why accounts payable is important for your organization
Accounts payable may not look like an appealing function but it’s quite significant. Every organization needs AP staff that maintains relationships with vendors and takes care of the workflow. They look after early payment discounts. They are responsible for expense management. AP staff plays an important role in detecting fraud or theft.
Accounts payable workflow should be very efficient. It minimizes the cost of processing AP invoices. It enhances the ability of the AP staff to fulfill its key functions, such as capturing discounts and detecting duplicate or inaccurate invoices. It frees more time for higher-level functions, like analysis and fraud detection.
Having scattered account payable documentation or not having one at all is unacceptable in business. You need to have an accounting software that gets your job done. Profitbooks can help you make the most sorted accounts payable to have an easier workflow and gain more profit.
Our software is entirely cloud-based so your data is highly secured and you don’t have to worry about it being lost. Record your purchases and expenses, create invoices, and a lot more with Profitbooks.