Accounts Payable Management
This recommended service includes:
- Subscription (with client access) to Receipt Bank to store supplier invoices*
- Upload & attach vendor invoices and receipts to expense transactions in accounting software
- Reconcile Accounts Payable
*in approved cloud storage facility that client will retain ownership of
Do you order inventory or office supplies from vendors on credit? How well are you track what you owe to each vendor? Do you remember if the correct items in the correct quantity were received? The answer to these questions and the ones that follow will tell you whether or not you could use some help with accounts payable management.
Do the packing slip, purchase order and invoice match? Are backorders clear? Were you invoiced correctly? Is the unit price correct? Are shipping costs and applicable taxes correct? Are your invoices getting paid on time?
Optimized accounts payable management means managing credit purchases while not missing out on auspicious circumstances, allowing you to jump on unexpected opportunities and fund growth. The process includes procuring the right vendors to purchase from, acquiring favorable credit lines & terms, negotiating payment discounts, acquiring the right number of desired items, fulfilling payment obligations, and controlling the timing & flow of purchases to effectively sustain cash flow without delaying payments.
A company’s accounts payable is a liability. Trade credit allows a company to defer cash outlays, which translates into effective working capital management.
An efficient payables strategy can allow better budgeting, enhance cash flow predictions, strengthen negotiating power, warrant lower prices, increase credit limits, extend payment terms, prevent late payments, maintain vendor confidence, and even encourage expansion with lower, more affordable interest rate loans.
For some increasing payables is a core business strategy so it takes a strategic approach to optimize your accounts payable and realize lower costs. Companies without formal, clear, and precise policies in place that prescribe purchasing levels & authority, approval limits & process, preferred vendor negotiations, spending limits, exception reporting & handling, paperwork routing, payment authorization, and how to resolve disputes can find themselves underwater quickly.
No company can afford to waste their financial resources. There are strategies for optimizing your accounts payable management to make your money work for you.
- Use workflows to help identify problems, enhance efficiency, resolve bottlenecks,
- Insist vendors include a Packing Slip with every shipment
- Establish preferred vendors for favorable buying terms
- Leverage vendor performance scorecards
- Utilize Receiving reports
- Provide procurement training to employees
- Enable electronic communication with vendors
- Use purchase orders to detail item name, quantity, price, terms, and conditions for all orders
- Set reminders
- Streamline approval process
- Consider automation to reduce time and human error
- Enforce process for transferring paperwork from receiving to payables
- Date stamp packing slips and invoices when received
- Confirm items and quantities received are correct on Packing list and match Purchase Order
- Confirm backordered items match
- Regularly track performance indicators, such as order accuracy, delivery time, on-time delivery, defect rate, number of days payables are outstanding,
- Confirm invoiced items, quantities & prices match purchase order
- Document irregularities immediately
- Take advantage of available discounts
- Update vendor profiles as changes occur, whether a new address, payment term, credit limit or circumstance. Include product/service details, quality standards, deliver timelines, responsibilities, regulatory compliance mandates.
- Stay within authorized spending limits
- Pay on time. Avoid paying early or late
- Do not pay inaccurate invoices
- Ensure all employees adhere to common standards and practices for purchasing, processing & reporting payments.
- Track vendor invoices against their associated Pos
- Measure vendor performance against established metrics.
- Regularly audit vendor contracts and performance
If your company doesn’t have established, written practices and procedures for accounts payable management, outsource to a company that does.