Disclosure: This is a sponsored post.
Does your business ever experience cash flow issues? Pro tip: Your trouble may lie with your accounts payable process. Here’s how to make it more efficient.
If there’s one thing that both Type A and Type B people can agree upon at work, it’s that they can’t stand lack of organization at work. Even if you’re not a typically organized person, an organized accounts payable process means that your business gets paid on time and your sheets are balanced. In companies that lack this, people wonder if they’re going to get paid or not.
If you want to streamline your accounts payable process so this doesn’t end up being you, follow these four steps.
1. Get Rid of Paper
While it might feel nice to hold your invoices in your hand to know you’re getting paid, it’s not always the best way to get paid quickly.
When you choose to go paperless, you get to embrace all of the ways you could be getting paid electronically. Rather than dealing with all the waiting, accepting electronic invoices is the smartest move you can make.
Most systems in previous eras wouldn’t deal with electronic invoices unless you had an expensive and unwieldy system for managing the invoices. These structures were called EDIs and were costly and difficult to handle.
Now vendors are comfortable sending PDF invoices in a matter of seconds. If you’re ready to receive them, you should have no trouble at all managing this kind of system.
If your main hurdle is organization, you’re going to have just as much trouble managing paper invoices as digital invoices. Digital invoices require data entry and some level of archiving for storage. If you get invoices, you need to also extract data correctly for bookkeeping and managing your accounts. However, since an increasing number of systems are optimized to accept digital invoices, they can often turn these documents into real manageable data.
While some of your clients will continue to send paper invoices, you can still cut back if you can get half of your clients to send you digital invoices. When you have half of your data already input for you or ready to be read by a digital program, you can cut down on your processing time.
If it currently takes you several weeks to get paid, a digital invoicing system might cut your wait time down to just a few days. Getting paid quickly is the key to survival as a business.
2. Centralize and Cut Back on Data Entry
If you have vendors that won’t allow you to go paperless, you’ll be struggling to deal with those vendors who refuse to send electronic invoices. If you can’t get them to go digital, you can go through the process of scanning all of your invoices. The quality you get from most scanners now will be readable by computers.
If you can get a program that can convert the image you scan into text, you won’t have to enter your data manually. While it might take some setup to get this kind of system going, it’s worth your time. You could save a significant amount of time on data entry.
Some software programs can parse the data in your invoices and automatically get it into your system. It could require an initial investment, but if you can get paid faster, it’s worthwhile. Speed has its advantages.
While there might be people on the management team that swear that your current process works, you might find that they’re just resistant to change. Rather than changing their methodology or investing in training, they might think it’s better for you to waste your energy.
Companies know that data entry is a waste of time when it can be avoided. The amount of money lost to human error isn’t always worth the short-term savings. Lost invoices or data that are entered incorrectly could be leading to unnecessary loss of income.
3. Automate It
If you can get your invoices fully digitized, you can then find ways to automate the processing. If you have access to the company names, contact information, and how much they owe, you can send out a batch of bills or payments at the push of a button.
Fully automated systems help clarify an invoicing process from end to end. Invoices can be quickly approved and transactions can be rectified quickly.
You can receive invoices that make sense to your system when you automate the process. You can also assign work to different members of your staff that fit to what they can do to streamline the process. The review and approval process can go from taking an entire day to mere minutes.
With all of the information in front of them, it’s hard for your staff to make a mistake.
Accounts payable automation has caused a sea change in the world of accounts payable. If you never imagined automating your system, take some time to learn more.
4. Simplify It
When you create standard operations for basic work, you can make your whole system more efficient. This streamlined process will be more organized and make it much easier to approve and receive invoices.
Your suppliers will be happy with quick payments and your accounts payable program will be screaming your praises from the rooftops.
If your clients don’t have a clear and streamlined process for invoicing, they’ll end up sending invoices scattershot. They’ll be sending invoices to everyone on your staff based on the last person they spoke to. That means that you could have invoices collecting dust in the inbox of a part-timer currently on maternity leave.
Digitizing means that everyone knows who gets the invoices that come in because they’re always addressed to that person.
Your Accounts Payable Process Should be Clear
If you’re not sure whether your accounts payable process is working or not, ask yourself how long it takes for a payment to process. If it’s more than a week, you need to make some changes.
If you think an accountant could make things easier, check out our guide for hiring one.