Organizing accounts payable process: A guide for businesses
Organization is the key to efficiency, this much is true for every business out there. A successful business always looks to improve itself, especially in terms of efficiency and organization.
Organizing accounts payable systems make up a key part of this process. Accounts payable, when done correctly, can save your company heaps in terms of resources, labor, and time.
All companies have bills to pay, no matter how big or small they are. For a small business organizing accounts payable files and processing them might not always be a very big hassle.
However, for big businesses with large accounts and long laundry lists of payments, you need to learn all about organizing accounts payable processes to ensure the utilization of your effort and resources is as efficient as it can be.
How to organize accounts payable process for a business?
Organizing accounts payable for your business can be done efficiently by implementing the following practices:
1. Audit existing accounts payable process
Before you can start going about the whole process of organizing accounts payable you need to first identify the areas that need to be addressed.
You need to locate the pain points, bottlenecks, and sources of resource misallocation. Start by addressing the following questions:
• When your business grows will the current system be able to handle upscaling
• The frequency of late or missed payments
• How often are invoices misplaced or damaged
• How often are duplicate payments made
• How efficient are your approval protocols and procurement processes
• How much visibility do you have over cash flow and expenditures
2. Creating effective communication process with vendors
For your accounts payable system to work like a well-oiled machine you need to establish effective communication with your vendors. Good relationships with vendors and suppliers can help you go a long way and help improve AP processes.
Proper relationship management with vendors can improve your chances of getting good deals, offers, and discounts. Good relationships with vendors can also help you resolve discrepancies and check for errors without much delay.
3. Introduce approval workflows
Invoice approval workflows are designed to ensure no unauthorized payments or purchases are made on behalf of the company. Having one in place is one of the best accounts payable organization ideas.
Keep cost thresholds for levels of payments and ensure important approvals are always authorized by higher management. You can even use an approval workflow software to do this for you.
4. Invoice batch payments
Making payments throughout the month as and when invoices come is not ideal. It means that there’ll be a never-ending, continuous cycle of receiving invoices and making payments. Instead, process invoices in batches.
5. Digitizing the existing AP process
Not only are paper-based AP processes not eco-friendly they can also lead to a range of problems such as errors resulting from data entry done manually, missing documents. A digitized AP system, however, accounts for all these hurdles.
6. Creating vendor self-service portal
A self-service portal for vendors can help you provide and store information for your vendors easily. A self-service portal lets vendors store and update important information like their payment details, invoice status, and contact information.
They can also use this portal to make inquiries to your AP department and receive answers faster than emails or calls.
7. Automate repeated day-to-day tasks
Day-to-day tasks that are usually repetitive in nature, like manual data entry and approval routing, can be automated to free up time for your accounting department.
You can use automated systems to do these tasks while accounting teams can spend more time and effort on value-generating tasks.
8. Leveraging the use of artificial intelligence
Artificial intelligence and machine learning are modern-day wonders that can make accounting teams’ lives much easier.
Instead of painstakingly going through every invoice and transaction to identify discrepancies you can simply get AI-equipped accounting software that can do this job for you.
9. Creating monthly or weekly MIS reports
MIS or Management Information System reports can help your management make faster, more informed decisions.
You can use accounting software to create reports on aspects like spending behavior and transaction frequency to enable better AP reporting and therefore improvements in organizing accounts payable.
Efficiently manage your accounts payable process with Volopay
Volopay offers a comprehensive account payable management system that can help you do all of the above and more. With Volopay you can handle the end-to-end processes involved in your company’s accounts payable system.
You can directly receive invoices on the platform and let the software do the rest for you. Tasks like processing invoices, batch payments, expense reporting, and approval workflows can all be done seamlessly on Volopay.
You can even get corporate cards to gain a great degree of control over your business expenses. In today’s day and age, such a platform can go a long way in organizing accounts payable for your business efficiently.
FAQs
Yes, Volopay is capable of handling multiple vendors and vendor payments with ease.
Yes, Volopay has a highly nuanced, customizable invoice approval workflow tool that you can use to ensure unauthorized payments never happen again.
Using Volopay vendors will receive payments almost instantaneously after you send them out.