Accounts payable processes are an essential part of any business, and they play a critical role in maintaining healthy cash flow and supplier relationships. As businesses grow, managing AP becomes increasingly complex and time-consuming, leading to inefficiencies and errors. To overcome these challenges, businesses can adopt various strategies to optimize their AP internal processes, including:
- automating invoice processing
- centralizing invoice management
- monitoring and analyzing AP metrics
In this article, we will discuss each of these strategies in detail, highlighting their benefits and how they can help businesses improve the efficiency, accuracy, and cost-effectiveness of their AP processes. By implementing accounts payable standardization, businesses can gain a competitive advantage and achieve their financial goals while maintaining strong relationships with their suppliers.
How can I improve my AP efficiency?
Improving accounts payable process efficiency leads to optimizing cash flow management and reducing costs. The top 3 best practices to improve accounts payable efficiency are:
- automate bill processing
- centralize bill management
- monitor and analyze AP metrics
Automate Bill Processing
Use AP software like bill.com to streamline the processing of bills, typically through OCR technology and automated approval workflows. The benefits of automation include:
- Increased efficiency through software automation.
- Improved accuracy and integrity by eliminating manual data entry.
- Cost savings by reducing error rates and shorter processing times.
- Reduced fraud risk and training time through AP standardization.
Automated bill processing can reduce the cost of AP management by up to 50%.
Centralize Invoice Management
Consolidate bill processing and management into a single location or team. Consolidation ensure better AP standardization and thus better visibility and control over the entire bill processing cycle. Centralized AP reduces the risk of fraud by keeping cash flow management in the hands of carefully supervised trained professionals. Lastly, centralization also enables businesses to consolidate purchasing information and better negotiate with suppliers.
Monitor and Analyze AP Metrics
Optimize your accounts payable processes and improve financial performance by monitoring and analyzing AP metrics. AP metrics provide valuable insights into the efficiency and effectiveness of the AP process, helping businesses identify areas for improvement and cost savings opportunities. Common AP metrics include:
- Bill processing time
- Payment processing time
- Number of bills processed
- Bill error rates.
By monitoring these metrics, businesses can track performance over time, identify trends, and make data-driven decisions to improve their AP processes.
Improving to your improved AP process will be challenging. Changing existing internal processes in a business can be costly and time-consuming due to the need for training, software/hardware acquisition, and potential disruptions to existing workflows. Outsourced accounts payable services save time and money by reducing the need for in-house AP staff, streamlining the AP process, and providing access to specialized expertise and technology. Outsourcing also enables businesses to focus on their core competencies while leaving accounts payable/AP management to experts.