As a small business owner, you have to spend on items to run
your business. So, you might have vendors and suppliers who supply material for
the manufacturing of your product. And you may receive an invoice with every
purchase from your vendors, which is important.
Thus, it is an important aspect of accounts payable and is
tough to manage.
Every organization witness a skills gap; 75% CEOs feel their
in-house team isn’t proficient enough to keep up with changing business
environment. Keeping that in mind, it is always helpful to define clear,
precise and well-defined workflows and practice in every business process.
Here are some common mistakes in the AP process:
1. Fail to issue
purchase orders.
2. When order
deliveries do not match contractual term.
3. Lack of
processes to prevent under and over payments, duplicate or missed payments.
4. Lack of quality,
operational efficiencies, and corporate finance.
Here are the steps you can follow for improving the
efficiency of your accounts payable process:
1. Accept electronic invoices
a) Eliminate paper
invoices and accept only electronic invoices.
b) Certain systems
today achieve electronic invoices without expensive EDI infrastructure.
2. Centralize effective data and eliminate
data entry
a) Centralized
scanning solutions are now available for those vendors who do not supply
electronic invoices.
b) Perform all the
data and functions automatically with invoice and improve your accounts payable process.
3. To simplify and standardize
a) Organize the
functions with standardized and streamlined accounts payable process.
b) Receive accurate
payments much more quickly.
4. Budget your expenses
a) Proactively
creating business budgets can help you improve AP process and avoid late
payments.
b) Use your accounts payable sheet in the dashboard to keep
yourself updated about all the bills that you need to pay.
5. Expand your cash reserve
In the day, when
your cash flow is little slow, you might need to use your cash reserve and make
keep your AP process on track.
6. Always compare with the original
It is advisable to
try and pay against the original invoice but if paying from a copy, compare the
invoice number and charges indicated.
7. Audit trial is imperative
Even if you don’t
plan on paying the entire invoice amount, it would help the audit trial to mark
it as billed. At these instances, use credit memos.
If you want to maintain the
efficiency of your AP process in a long run, below are some effective tips that
you should adopt for your business:
• Eliminate
excessive data entry for accounts payable process improvement.
• View the progress
of invoices with the easy reduction of time.
• Adopt tools for
faster automation of approvals.
Click
on the link & explore some simple tips that help your business to streamline accounts payable process & stay alive in this competitive environment.
