Accounts payable (AP) is crucial in every business. Finance teams make sure the company pays its bills and creates reports for financial planning. To run your AP smoothly in your finance department, try these best practices:
- Input Invoices Quickly
Enter invoice details into your AP system as soon as you get them. Some teams type it in manually, while others use invoice scanning software to save time and reduce mistakes.
Invoice scanning software uses OCR tech to automate data entry. Some advanced systems even use machine learning for better accuracy.
Full-service invoice management systems, with advanced tech and professional indexers, offer top efficiency and accuracy.
- Simplify Approval Processes
Set clear rules for approving invoices, like needing director approval for large amounts or allowing a 5% tolerance for PO mismatches.
Design a system that fits your organization’s needs and prevents delays. Ensure it’s easy for your AP team, especially since many workplaces are now hybrid.
Some AP tools like Collect can automate the approval process, sending reminders and rerouting invoices when needed.
- Measure Performance with KPIs
Use key performance indicators (KPIs) to track how well your AP team is doing. KPIs might include how quickly invoices are processed, the error rate in data entry, and the cost per invoice.
Understanding these metrics helps identify areas for improvement and efficiency. While you can track KPIs manually with spreadsheets, some AP tools offer reporting dashboards for easy insights.
- Offer Clear Visibility
Visibility helps you keep track of financial processes and ensures payments are made on time and accurately.
When everyone can see where an invoice is in the process, it’s easier to catch mistakes and fix delays.
Centralized AP systems let you see invoice status digitally, from anywhere and at any time, which is handy for remote or multi-location teams.
- Negotiate Discounts and Terms with Vendors
By implementing accounts payable best practices, your team can have a significant impact on the organization’s bottom line. AP staff can work with vendors to negotiate opportunities for discounts and improved payment terms.
Using reporting tools within your AP system can help identify vendors for potential strategic partnerships or early payment discounts. Some AP software delivers automated reporting dashboards which make it simple to pull vendor history and other data.
- Strengthen Vendor Relationships
Managing vendors is crucial for AP. Besides paying bills on time, AP teams handle contracts, vendor data, and compliance. They also watch for risks and work with vendors to benefit both businesses.
- Go Paperless
Handling paper invoices takes time for AP teams, from entering them to storing them. Switching to digital workflows boosts efficiency, cuts errors, and speeds up invoice processing.
This helps vendors get paid faster and boosts department productivity. Plus, it saves on paper, storage, postage costs, and is eco-friendly.
If you’re looking to transform your accounts payable process, Collect offers payment automation solutions to manage accounts payable end-to-end. Sign up here.