3 min read

4 Approaches to Improve Your Accounts Payable Process

Featured Image

Gone are the days of plain vanilla and chocolate ice cream dominating the American landscape and palette.  Instead, we’ve seen a much more nuanced approach by ice cream makers to provide gelatos, sorbettos, reduced fat, organic, all-natural, sherbets, and many more.  All of this diversification has been done in an attempt to sate the insatiable appetite of Western consumers and our proclivities for the unusual or new.

With that being said, there has been a similar diversification of multi-faceted business solutions that are present in the marketplace to assist you in improving your Accounts Payable process. In fact, if you can’t find a solution to help you, it certainly won’t be for lack of options.  The key then comes down to defining which areas of AP process improvement you’re trying to tackle. So for the remainder of this piece, we’ll break down some of the more common pursuits of many organizations in overhauling their Accounts Payable process.

 

The Mod Squad:

      Invoice Processing – Presentment to Payment – one of the most common areas of improving the accounts payable process, and one where we believe that we have some meaningful things to say, revolves around converting paper invoices (typically through OCR) to data and then using that data to drive the business process forward in conjunction with business intelligence, workflow, and imaging.  Finally all of this good data needs to get married up with your ERP system so you can get out of the traditional data entry mode that many Accounts Payable organizations find themselves wallowing in.

-       Imaging – Archival purposes – certainly, one of the most prevalent methods that many businesses have pursued in attempts to improve their Accounts Payable process is of invoice imaging. However, it’s not uncommon to see this approach taken when the invoices arrive at the final destination in their life cycle…payment.  For most businesses taking this cheap and cheerful approach, it’s not to have to deal with the glut of storing boxes and boxes of invoices or cramming them in file cabinets between the netherworld and storage C in the basement. The primary challenge for this approach is that it actually adds to the process without streamlining it, except from an archive retrieval standpoint, and it is often predicated by the necessity of having at least some kind of a document management system, hopefully, more advanced than just a Folder structure on a shared drive.

-       Payment – Electronic or otherwise – With so many new technologies in the market today, the demise of the paper check is inevitable…or so they say.  On some level, paper checks will probably always exist. However, their use is certainly going to be curtailed within the Accounts Payable process for the following reasons: A. the dramatic rise and use of direct ACH transactions, B. the growing trend for organizations to introduce P-cards, and C. the industry upstart of virtual payments & payment management technologies that intelligently automate and route payments to your vendors based upon their preferred methods. Some of these latter approaches are highly incentivized for both the supplier (time to cash) and the purchaser (significant cash rebates). So for both of those reasons, the perfect storm to oust costly time and resource-consuming Accounts Payable process items like check printing is brewing.

-       Dynamic discounting – With all of the above strategies, there are tangible and intangible benefits to improving the Accounts Payable process. Certainly, some approaches can drive massive sums of money back into the organization's coffers of those who intelligently execute them.  However, dynamic discounting is still uncharted waters for many organizations.  Certainly, many companies are willing to trade a discount on their invoice if they can recoup what’s owed them a bit faster.  Systems are being built that cater to this and provide intermediary connectivity between suppliers and vendors to provide a directly proportional scale of payment time to discount percentage along with settlement technologies. The net result of this is that AP organizations can be clinical about managing cash and maximizing realized discounts,

This is not meant to be an exhaustive list of every major Accounts Payable process improvement strategy under the sun, but rather a highlighting of some of the more compelling ones that exist today.

 

So the question remains for you…what strategy are you pursuing and why?

To learn more about Accounts Payable automation through document process outsourcing, we suggest this article here and to learn how to make your vendor payments a profit center for your business, go here!

GET STARTED

Why You Must Read “The Ultimate Guide to AP Automation for Auto Dealerships”

It’s no secret that your AP department plays a major role in the success of your auto dealership. Not only do its processes impact cash flow and...

Read More

3 Reasons Why Your Auto Dealership Should Stop Paying with Personal Credit Cards

Personal credit cards are still a popular way for businesses to cover expenses, whether it’s for products, office supplies, repair services or...

Read More

5 Reasons Why Dealerships Should Avoid Paying By Check

It’s time for your auto dealership’s AP department to go from Stone Age to the Digital Age with electronic payments! They’re cheaper and more secure...

Read More
footer