Accounts payable are not always a priority for small businesses. Instead, they are more concerned with chasing up customers who have fallen into arrears. This is perfectly understandable, but forgetting to pay your bills is not the best way to build trust with suppliers. It could also lead to credit problems if you are consistently late paying bills.
Often, all that is needed are a few simple tweaks to your workflow process, so let’s look at how you can streamline your accounts payable department.
Keep it Simple
The more complicated you make the process, the longer it will take. Paying bills each time someone sends you an invoice is understandable, but paying random invoices at different times of the day is a massive time drain. Allocate one day of the week for supplier payments and stick to it.
Batch tasks together so you can concentrate on one task at a time. For example, you could allocate a morning to paying suppliers and freelancers and then switch to updating your accounts software in the afternoon. This will reduce the likelihood of you making serious mistakes.
Technology is your friend. Accounts payable services and software solutions can streamline the process by strengthening compliance, reducing costs, and adding value to your organization. Invoice processing can be automated and you can run reports to discover what key suppliers are costing the business.
Anything you can do to reduce the administrative burden in your small business will boost your bottom line.
Assign the Right Person to Accounts Payable
It may sound obvious, but not everyone has a head for numbers. Some people don’t deal well in an accounts capacity, so consider who you hire to take care of accounts payable. Look for someone with the right level of experience, and if you are hiring from within, make sure the person receives appropriate training.
Allow for Flexibility
Your accounts payable department should be flexible enough to allow for partial payments and changes to supplier terms. Some vendors may have a higher tolerance for late payments, so make a note of this in case cash flow is slow. Run reports so you know which payments are due and when. This will help you better manage your company’s cash flow.
Regularly Review Records
There is always the potential for fraud within accounts payable departments. An unscrupulous employee could set up a dummy supplier and route payments into their own bank account. All payments above a certain amount should be verified by more than one person. Do not allow large payments to be made without approval from you or a senior officer of the company.
Review accounts payable records regularly and if you spot any anomalies, investigate further to rule out fraudulent transactions.
Regularly review all accounts payable procedures and ask your staff for suggestions on how to improve workflow processes. Sharing ideas and being open to feedback will improve communication and streamline your business. Even small companies will benefit from an efficient accounts payable department.