Accounts payable has always been a repetitive back-office function. Businesses consider it necessary but view it as back-office work that needs to be completed. But as the CFOs and other finance executives have appreciated the value of AP and its benefits to organisations. Business owners have started pushing the AP department and employing best practices. Especially small businesses should strive to maintain a strong AP department. Small business accounting services help transform the overall AP process the organizations follow.
The accounts payable process ensures that accurate, timely, and error-free payments are made. An AP department receives all the invoices, and that data needs to be addressed with accurate payments and cost center data. After that, the invoices are matched against the purchase orders and involve a few more steps. This whole process can either be done manually or through automation. However, small businesses can adopt certain practices to eliminate or minimise issues in the AP process. Let us highlight some practices that can be adapted to better the AP process:
Organising invoices- A small business should keep track of what needs to be paid and what is essential to manage the business's cash flow. All the business invoices should be properly organised based on due dates and payment terms. In addition, the small business owners should match the invoice against the purchase orders and receipt of goods (if applicable).
Automation software- A small business can lessen the burden of manual invoice processing by automating the AP process. The process of invoices is time-consuming, and automation handles all the steps automatically. Automating the AP process helps to eliminate unnecessary delays, costs, and manual errors committed by human intervention.
Fraud detection- Money-related matters are prone to errors and fraud. The sources of fraud can be cyber criminals, suppliers, or even existing employees. Especially with a paper-based approach, the chances of fraud become even higher. AP automation helps to mitigate such risks by following a rigorous approval tracking system and a clear audit trail. The real-time visibility into the data helps to catch discrepancies and red flags.
Using KPIs- A perfect way to measure the performance of any business process is through key performance indicators. The KPIs evaluate the business's current performance compared to the previous ones. The AP department can set specific goals and use KPIs to measure how the department performs with the new or revised processes.
Final words
Not just the above, small businesses can adopt measures like keeping suppliers' information, standardising terms of payments, etc., to ensure a smooth accounts payable process. These practices constantly improve the AP process and help businesses to gain better control. On top of it, AP automation is another way to move the AP department to the next level. Small businesses can survive and thrive in the long run with lesser errors and frauds.
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