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By Darren Wilson
(Sponsored Content)
Accounts payable. Don’t run away yet! Most people don’t like accounts payable or handling invoices. However, they are a necessary evil of any business no matter the industry.
Bills have to be paid after all.
One of the biggest issues companies face with accounts payable is their invoicing process. A slow invoice approval rate can lead to late payments, duplicate invoices, and lost or missing invoices.
Taking time to evaluate and maximize your invoice processing and approval workflow can save not only time but money as well.
Automate wherever possible
One of the best things that a business can do for the accounts payable department is to automate. The benefits of an automated invoicing process seemingly grow by the day.
An automated system reduces the risk of duplicate, lost or missing invoices, as well as providing fraud detection. Where invoices can become misplaced due to trading so many hands, or mistakes could be made during comparisons of shipment orders and invoices because of human error, automation mitigates all of that.
If it’s possible to look to outsource entirely, however, as that may not always be the case, it helps to find similar benefits to automation elsewhere.
Evaluate
Evaluate the current invoice approval and processing workflow for any problem areas. The more transaction and invoice history available the better chance there is of noticing things like invoices that are always late, or get duplicated.
Once the more common and prominent trouble areas have been identified a root cause analysis can be done to determine the cause of the problem. And a solution can begin to develop from there.
Keep in mind that processes and systems that worked last month may not work as efficiently next month. Set up a schedule of when to evaluate the accounts payable workflow for any new or existing issues that have yet to be resolved.
Prioritize
Take the time to prioritize the vendors and when the bills are due. Determine which bills need to be paid first and which bills can be delayed a bit.
Keep in my this is not meaning to ignore bills because the vendor won’t start calling until the three-month mark. Don’t do that. Instead, recognize when it’s best to wait to pay the bill on its due date rather than right away.
But, should that not be possible to contact your vendors and attempt to negotiate a new payment plan. The more transparent a business is with a vendor, the more likely the vendor will work with the business.
Checks and Balances
If automation is not an option at this time, a series of checks and balances should be created. This will help to eliminate a lot of human error like duplicate invoices, late payments, missing or lost invoices.
Always have at least two or three individuals checking invoices either directly or through routine audits and reports. A good practice is daily audits of the invoice processing and approvals.
This will help to reduce the chance of paying fraudulent invoices or paying duplicate invoices. When it comes to accounting the smallest mistake can have the biggest of consequences. Check, check twice, and check again, always.
Late Payments
Try to avoid them. Seriously.
However, sometimes late payments are unavoidable. And there is no good reason for that either. That is why businesses who are backed into a corner and facing late payments should take heed.
Breathe. Contacting the vendors and explaining the situation to them can sometimes result in some leeway. This is more like a one time fix, and less like an infinite lives cheat code.
But, when there is no other way of being upfront and honest is the best way to go. Always do that.
Maximize Your Invoicing
Accounts payable is something every business must deal with. And while having an automated invoice processing system in place is the best bet for optimizing. There are other ways to maximize the invoice processing and approvals workflow.
Evaluating the system frequently for problem areas will keep the process smooth and streamlined while applying checks and balances will reduce the risk of mistakes.
When it comes to accounting the smallest mistakes can be huge. Getting on top of and reducing duplicate, missing, lost, or fraudulent invoices will surely save the company money in the long run. And keep the company’s reputation intact.
Darren Wilson is an Outreach specialist who loves to read and travel, writing on various blogs irrespective of their sizes. Reading by night and writing by day keeps him continually updated.
