For any business to be able to succeed, being able to manage financial records and reporting is extremely important. One function that is particularly important is accounts payable. If a company does not have a good system established for its accounts payable, it could find that it is falling behind on bills and into debt. This can make it hard to establish a good relationship with vendors and could lead to the accumulation of fees.
Since the A/P function is so important, many businesses choose to hire their own accountants to hand the payables. Unfortunately, this is not practical for all businesses to do. However, there are still ways that a small business can effectively manage its accounts payable system even if it does not hire an accountant to handle the task.
Simplify the Process
When you are looking to better manage your accounts payable, one of the best things that you could do would be to simplify the process as much as possible. Many businesses run into issues because they try to stay as current with payables as possible. This often results in a business writing checks to vendors on a daily basis. Unfortunately, this can make it very easy to lose track of open checks. A better option could be to limit your check runs to just once or twice per month, which will help to keep everything more organized.
One of the best ways that a business can better manage its accounts payable system is by using technology as much as possible. Today, there are a variety of different software programs that can help a business to better manage their accounts payable and all of their bank records. A business owner can even use a Quickbooks online payment system to make payments automatically, which is much quicker. These systems will also be able to produce financial reports and other data that could prove to be very useful.
Avoid Wasting Money
One of the main advantages of having a good A/P process in place is that it can help you to avoid wasting money. When you are looking for ways to improve your process, you should make sure it includes several steps and checks and balances that will work to make sure that you are not wasting any money. Many businesses end up wasting money by paying late fees or charges, paying too much for vendor bills, or simply becoming a victim of accounts payable fraud. Being able to avoid all of these unnecessary costs and charges could end up saving your business a lot of money on an annual basis.
Get Better Terms
When it comes to managing accounts payable, another advantage of having good processes in place is that you can get better terms from your vendors. Managing cash flow is always a challenge for small businesses. When you are looking to improve your cash flow, getting good terms from vendors can go a long way. When you are trying to improve your overall A/P and cash flow position, being able to extend your repayment terms by even 30 days could be very beneficial and could provide a lot of flexibility.
Outsource When Necessary
Most importantly, you need to know when it is time to find more help. If there are busy times of the year, it could make sense to outsource the A/P function. This could provide you with more time to focus on other areas of your business and ensure better A/P results.
When you are looking to improve your accounts payable system, it is important to find a process that works for you. While there are a lot of ways that a business owner can work to improve their processes, all owners need to make sure that it is a system that is easy to follow on a consistent basis. This will lead to better organization and management of A/P.
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