9 Surefire Ways to Simplify & Improve Your Accounts Payable Process

This tip is actually so simple that it often goes overlooked. Make sure that you set reminders to tell you when invoices need to be paid. Since they’re usually paid manually, it’s easy to make errors or forget. If you forget to pay your invoices, it’s possible to get charged a late fee. That's not something you want to happen.

If you have the option, plan all of your invoices on the same day or week. Then set a reminder one week in advance of your payment day to ensure you can pay the bill. If you need to, employ a second reminder the day before your first bill is due. This additional nudge is to inform you that all records should be updated by now. 

If you can’t put all of your invoices through on the same day, you should have a dedicated AP process which runs two to three times a month. The automated system should ensure that all invoices are paid on these set days. As a result, you'll never miss a payment and overspending will be curbed.

Money will always be leaving the business – that’s simply the nature of business. But if you want to maintain a healthy cash flow, you need to make sure there’s enough money coming into the business as well. To be successful, you need to sustain this balance. 

Before accepting contracts with any potential suppliers, it’s important to run a credit check on them. It’s important to always check your client’s business credit reports before you decide to work with them. The last thing you want is to be saddled with an unreliable customer who has a history of making late payments and has a poor business credit score. 

If you work with a company that pays you back late (repeatedly), then this will have a domino effect on your own cash flow and payments - creating late payment fees and a bad reputation for your own business. 

By running business credit checks on all potential customers, you can get a full sense of their financial health - how well they pay their bills, what their business credit score is, if they're a low or high credit risk, if they have derogatory marks and other important information. The more you know, the better protected your business will be. 

Learning how stable a company is can help you plan ahead and avoid making deals with slow businesses. If their DBT (Days Beyond Terms) is too long for your cash flow, then don’t work with them.

Automation is important to keep your business running smoothly and reduce inefficiencies. It eliminates human errors and cuts back on time wasted on monotonous labor. By using automated accounts payable software, you'll be handing over a lot of manual work to machines, allowing staff to focus on more important and strategic projects. 

Instead of spending hours sifting through files, your employees just need to complete checks. These checks ensure that your invoices match up with all the requisition and purchase information. 

With most of the labor completed by machines, it will run quicker and with fewer errors.

Having an up-to-date business budget is crucial for success. Budgeting means forecasting how your business will run in the upcoming months and how that affects your cash flow.

If you know that large purchases will be needed for a new project, then you should have a plan to maintain your cash flow during this time. Budgeting can help you reduce outgoing payments, or allow you to continue your expenses but with a lower profit margin for a short term.

Planning ahead is key to maintaining your business's AP processes and showing your clients that you are secure during turbulent times.

There’s nothing wrong with looking for better deals, but cheaper rarely means better. Quality is always king. If you think the quality of your products or services would be negatively impacted by the switch – don’t do it. 

However, if you’ve noticed that a new supplier is offering the same product as your current one, try negotiating with them. One may offer you a better deal to secure your business in the long run. 

The relationship you have with your supplier is always important. You want to be their best customer.

Not sure how to do this?

It’s simple. To become your supplier’s best customer, you need to order from them frequently, pay on time, and use their discounts and offers. When communicating with them, it should always be done in a friendly and polite manner, keeping it professional at all times. 

There’s more to being a good customer than spending a lot of money. When you are a great customer, the supplier will feel more comfortable with you, and you may have access to further discounts and offers. This good relationship will give you something to fall back on if hard times come around, and your payments are late. Not only that, but it can lead to referrals in the future, which can give drive more business opportunities!