Accounts payable is a crucial element within any finance team, but why is it so neglected when it comes to automation?
Software vendors are keen to convince accountants that good IT systems can streamline finance management to make a company's cash flow status more visible. This article draws on insights from several suppliers and draws on the experiences and advice of AccoutingWEB members on the cash management techniques that work best.
The importance of accounts payable
Any thriving business needs an efficient finance function, to which accounts payable holds the primary key. Businesses are often preoccupied, however, with top-line performance and neglect the day-to-day health of the company finances. Too often the finance department is seen as the last place in need of technological development.
But manual processes slow down productivity, which can add to costs in the long run.
If suppliers’ bills are not paid on time, they may become reluctant to continue to offer lines of credit. According to a recent whitepaper from enterprise solutions provider m-hance, systems that automate purchase–to–pay processes ensure visibility and give accounts payable teams choices of how and when to pay their suppliers. Deploying accounts payable technology allows companies to:
- Pay invoices on a predetermined schedule of the company’s choosing
- Ensure the accuracy and authenticity of invoices that the company pays
- Minimise, or eliminate paper
- Extract key business metrics
- Effectively manage working capital.
E-invoicing: eliminate paper wherever possible
Issuing, re-keying and handling information from paper invoices is unnecessary, according to m-hance; and using cloud-based software means payment records will be reliably backed up and can be viewed from anywhere.
OB10, a global e-invoicing network, also offered more tips for streamlining AP operations:
- Eliminate manual data entry – introduce e-invoicing
- Cut down on invoice exception handling - introduce purchase orders and implement a ‘no PO no pay’ policy with suppliers
- Reduce supplier queries – automate processes so you can pay suppliers on time or early.
E-invoicing can be a useful on the credit management side, too, when dealing with accounts receivable. It makes it harder for a someone to say their bill got lost in the post, and the receipt can be confirmed while you're still on the phone.