This is How You Manage Account Payable Properly
Account Payable (AP) is one of the important factors in the company’s working capital and is also a major indicator of overall operational effectiveness. If the indicator is too high, your organization may find it difficult to pay your bills on time, but if it’s too low, your organization can wisely pay bills earlier rather than enjoying grace periods and investing excess money to support business processes.
In addition, the level of Account Payable also affects several measures of financial performance including days payable and asset ratio to liabilities.
Best Practices Account Payable
Effective and efficient Account Payable processes can help you handle daily invoice volume as well as other additional processes such as monthly payment and activity. But, the volume of invoices and costs are very rarely consistent from day to day. Therefore, your organization needs a reliable system that can accommodate various metrics. In other words, it must be timely and accurate.
Timeliness is important because it can create continuity and consistency and build trust with vendors to enable your organization to function properly.
Timeliness is important, but without good accuracy of course it is not very helpful. To build credibility and avoid unnecessary repetition and costs, it is important for you to ensure that all vendor invoices are accurately indexed and processed into the Account Payable workflow in the first attempt.
Account Payable Management – Proven Process
In order for the Account Payable management process to be successful, your organization needs to focus on three main things: workflow, individual roles and responsibilities, as well as communication.
When we have successfully implemented the above, certainly payable account management will become easier and faster. Especially if the handling is assisted by using a software that can support work processes such as Acumatica Cloud ERP.