Ways to Mature Your Firm’s Accounts Payable Process
A US bank study found that
82% of the time, poor cash flow management or poor understanding of cash flow contributes to small business failure. Therefore,
you
should
consider
various factors affecting cash flow management.
Not managing invoices can lead to late payments, extra fees, and damaged trust.
Thus, to better manage your business bills, it is essential to take steps toward account payable process improvement.
Policies and Procedures
Accounts Payable is tough to manage; use the following ways to
Unclaimed Property Audit Standardize Your AP Process
Prepare a Budget
mature your firm's
Reduce Accounts Payable Fraud
accounts payable
Have a Cash Reserve
process:
Archive your data Build & Maintain Business Relationships
1. Policies and Procedures A mature AP process will include policies and procedures to handle outstanding checks that have not been cleared by the bank, as well as voided checks.
Both aspects, outstanding and voided checks, are a critical process to meet unclaimed property compliance; noncompliance can lead to millions of dollars of liability under audit from multi-state contingent fee auditors.
2. Unclaimed Property Audit Companies should implement clear policies and procedures to timely review outstanding checks and contact the payee to reduce the risk under an unclaimed property audit.
Companies should also document voids clearly to show liability is not owed to the payee. This can lead to minimizing audit risk, increasing employee and vendor satisfaction.
3. Standardize Your AP Proces Standardize invoice management from the time you receive a bill to when you pay it.
If you keep your invoices in a central location, you can quickly locate them. Try to order your invoices by priority and date. Generating accounts payable aging reports can help you track vendor payments that have surpassed due dates.
4. Reduce Accounts Payable Fraud It is important to establish system parameters in place, which will not enable the creation of any vendor without proper diligence.
It is mandatory to set up a new vendor in the accounts payable system by having multiple approval levels, reducing the chance of fraud to almost none.
5. Prepare a Budget Having a budget helps avoid late payments as you will be informed about how you need to pay and how much, along with the balance in your accounts.
Use invoices to decide your monthly expenditure and ensure you have that much money in hand while preparing the budget. This will help you avoid unnecessary spending.
6. Have a Cash Reserve During the months of slow cash flow, keeping a cash reserve can turn out to be a good idea. You can use this cash reserve as an emergency fund that you can use only when needed.
Open a savings account for your business and deposit money in that regularly, even in smaller amounts, but consistently.
7. Build & Maintain Business Relationships Your vendor relations are crucial for your accounts payable efficiency. If you establish a strong trust, it will go a long way, helping your business in several ways.
Good relationships with vendors can help you in times of uncertainties and other difficult situations. For instance, when you need the supply but don’t have enough cash to pay, their confidence in your business can save you here.
8. Archive your data Keeping track of your data is one of the best practices. Save all the data online after receiving billing documentation, including purchase orders, invoices, notices, etc.
This data must be helpful to pay invoices accurately.
The Bottom Line
You will always have bills to pay; thus, being updated with invoices and account balances can help you keep away from worries related to missed or late payment.
Outsource accounts payable services to Cogneesol and see the difference we make.
We strive to help your business remain in compliance and grow consistently. If you are looking for an , accounts payable outsourcing partner , please get in touch with us today.
Talk to Us Call +16466882821
Email Address info@cogneesol.com
Website www.cogneesol.com