Best Practices For Creating A Strong Accounts Payable Strategy

 

An accounts payable manager stands facing a wall, casting a shadow that depicts a muscular, bodybuilder silhouette, symbolising the empowerment and strength of a well-structured accounts payable strategies.

 

 

An effective Accounts Payable (AP) department is a vital cog in the business ecosystem, delivering real-time insight into the financial health of the company, optimising working capital, and protecting valuable relationships with suppliers. What steps can AP managers take to ensure their Accounts Payable strategies are robust and flexible enough to respond to business challenges?

 

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1. Make Accuracy Your Priority

AP mistakes can be more than just a minor nuisance. Inaccurate data entry, for example, can generate exceptions that must be traced and resolved, delaying payments to suppliers, and giving a misleading picture of the real-time balance sheet. Errors are time-consuming to address, distracting AP staff from their other responsibilities, and causing a bottleneck in the department’s workflow. Introducing an automated invoice processing solution will eliminate mistakes and give your AP team time to focus on more profitable tasks.

2. Understand The Key Steps In Ap Workflow

Complex AP workflows increase the capacity for errors or late payments. Reviewing your workflow to identify and isolate the causes of bottlenecks is necessary to implement change, while streamlining the process will speed up approvals and standardise reporting across the department. An automated solution is key to a simpler, more streamlined process that doesn’t compromise on accuracy.

3. Centralise Your Invoice Payments

Many businesses have multiple sites where purchasing decisions are made, but should ensure that all supplier invoices are processed and paid in a single location. If several Accounts Payable teams are involved, the potential for errors, miscommunications, and delayed payments is magnified, and staff will spend more time chasing their tails than settling the business’s liabilities.

4. Track Every Due Payment Clearly

With hundreds or thousands of vendor invoices arriving daily, keeping track of each payment due date is clearly a challenge. By introducing AP automation, you can be more confident that invoices will be settled quickly, as three-way matching will be completed automatically, exceptions will be raised promptly, and liabilities settled in line with pre-defined approval criteria.

5. Know Who Is Responsible For Authorising Payments

A systematic approach to authorising payments will ensure that each invoice is settled correctly by the right person, a tool which can be easily incorporated into AP automation. By clearly separating duties and internal controls in the Accounts Payable process, you retain optimum control over vendor approval and help identify errors in supplier data more quickly.

6. Capture Invoices In Small Doses

Instead of being overwhelmed by mountains of invoices, utilising the latest OCR technology to capture invoice data reduces input errors and ensures the rapid transfer of information to SAP. Managing the workload in small doses lowers the risk of mistakes and allows staff to organise fluid workflows that are free from logjams.

7. Pay Invoices In Larger Batches

In some circumstances, paying invoices in batches can be an efficient cost-saving measure. Bookkeeping is cleaner with improved visibility, payment cycles are more predictable, and time is used more efficiently, with less stop-starts during the approval and payment process.

Contact Cogent Consulting For More Information

At Cogent Consulting, we have helped hundreds of companies to automate their AP workflows and build strong Accounts Payable strategies. To arrange your free, no-obligation product demonstration of our industry-leading AP solutions, please get in touch today.

SAP Invoice Automation Guide - Cogent Consulting