An effective accounts payable (AP) department is an essential part of any business, helping maintain healthy finances and happy suppliers.
If your business has an automated accounts payable system, there are 10 habits your team can establish to improve their chance of success and efficiency.
What do successful accounts payable departments do?
- They focus on minutes and not hours
For a business receiving a deluge of invoices on a daily basis, efficient management is essential. Automated invoice capture replaces hours of data entry and the focus is shifted to data quality with validation requiring minutes of focus.
- They focus on one thing
The workflow in an automated AP system ensures staff are only sent one transaction at a time so they are not distracted by piles of problem paper invoices.
- They don’t use to-do lists
They have visibility of where each invoice is in the process and so when a supplier calls they do not have create to do lists to follow up on questions about the progress of an invoice.
- They beat procrastination with time travel
Automated AP software gives full visibility of the purchase invoice commitments in flight and so they are able to quickly identify the payables commitment forward rather than procrastinate and try to work out what will be due in the future.
- They make it home for dinner
At month end accounting departments often have to work extra hours to compute accruals for invoices in flight. Faster invoice processing arising from automation reduces the number of accruals required. Where accruals are required these are easily identified because of the visibility of invoices in the process.
- They only process email a few times a day
Supplier invoices received by email are automatically captured into the Automated AP software direct from the email and so there is no need to frequently check e mail.
- They avoid meetings at all costs
The audit trail in automated AP software allows tracking of where an invoice is in the system and the workflow makes it clear to staff in other departments what is required of them (approval and or coding) enabling AP staff to progress invoices rather than have to meet with departments to investigate problems.
- They follow the 80/20 rule
Typically 80% of supplier invoices received by an accounts department should flow through to payment without problems. In a manual process processing of these is often held up dealing with the 20% that require more attention. Automated AP software allows 80% of transactions to flow through the system without delay. Staff can focus their efforts on progressing the 20% of invoices that need more attention.
- They delegate almost everything
Automated AP software ensures the right task is addressed to the right person using workflow. The AP staff can manage the process across departments rather than spend their time trying to find out where invoices are and what stage they are in the process.
- They only touch things once
Automated accounts payable software enables invoices once validated to pass through the workflow and be posted directly to the purchase ledger without further processing by the accounts payable department.
*This blog first appeared on Finance Digest and can be viewed here