In today’s digital world, your customers want fast invoice and payment processing. Unfortunately, your finances only move as quickly as your accounts payable processes. If those are slow and inefficient, you’re missing opportunities. This article introduces strategies for optimizing accounts payable processes, as well as specific major opportunities for improving AP processes.
Why make accounts payable more efficient?
The short answer: You are spending time and money on things you don’t have to.
When we look at inefficiencies in accounts payable processes, it comes down to two major areas:
✔️ Time: you’re spending a lot of time processing invoices for payment.
✔️ Money: you’re losing money or missing opportunities to save money.
Automating slow and outdated processes with accounts payable technology will save you time and money that you could spend on other business areas. By implementing some of the solutions mentioned in this article, you can reduce costly errors like over-payment, identify ways to save money (like prepayment discounts), and increase your capacity to scale your business without hiring additional staff. Reducing paperwork and manual labor are two of the biggest areas you can address to improve accounts payable efficiency. Here’s how.
- See related: What is Accounts Payable Automation?
How to make accounts payable more efficient in 3 easy steps
How do you know which is the best strategy for optimizing accounts payable processes in your business? There is an abundance of products, solutions, and methods available for improving AP processes, so it’s important to “do your homework” first. Narrow it down by following our 3 step process.
1. Identify problem areas
Late fees. Bottlenecks. Overpayments. Waiting for approval. Canceled contracts. What are your accounts payable department’s biggest pain points? Are they short on resources like time and money? In order to improve accounts payable efficiency, you need to first identify your biggest problem areas. Start making a list by talking to your employees, reviewing supplier feedback, and looking at past data.
2. Determine your list of needs
Once you’ve identified your problem areas, it’s time to rank them in level of importance. Pay close attention to which resource (time and/or money) each problem is costing your business. Identify problems that are costing you the most money (e.g. overpayments) and the most time (e.g. manual processes). Identify the most expensive problems, and choose one or two to focus on first.
3. Select a solution
Now that you know what you need, it’s time to start looking at accounts payable optimization solutions. Keep in mind that any solution you choose may solve more than one problem you identified in step 1. Below, we’ve compiled a list of major strategies that can improve any number of accounts payable problems.
4 major ways to improve accounts payable processes
Improving your AP processes can save time and money. We’ve identified four major opportunities for AP process improvement. Start saving time and money by adopting one or more of the following strategies for optimizing accounts payable processes.
Digitize your paperwork
If you were to choose just one change to make, digitizing your paper assets will have the biggest impact. Reducing paper assets like invoices, contracts, purchase orders and receipts enables you to quickly process and track money. Reduce the risk of losing paper assets by setting up a secure supplier portal to manage contracts and store all digital assets. Improving AP processes starts with digitizing paperwork in as many business verticals as you can.
Automate your processing workflows
Are you paying your customers on time? Manual processing is prone to payment errors, duplicate payments, delays, and is ultimately limited by the capacity of your workforce. Accounts payable automation saves time spent manually processing and auditing invoices. Not only that, manual processes offer limited data insights which require manual audits to obtain. Accounts payable automation enables you to digitally track and analyze key performance indicators. Improve accounts payable efficiency by automating as many AP processes as possible.
Use data reporting for AP process improvement
Digitizing and automation comes with the added benefit of data insights. Instead of manually auditing, use data analytics to identify opportunities to improve accounts payable efficiency. Improve accounts payable efficiency by using data to identify bottlenecks, delays, and cost savings opportunities like early payment discounts—all automatically.
Migrate your data to the cloud
Are you managing your accounts payable processes in-office? How often do you back up your data? An easy way to improve accounts payable efficiency is with an accounts payable cloud solution. Not only does migrating your assets to the cloud reduce risk of data loss, but it also saves on manual data entry time. Access your accounts payable resources in real-time, from anywhere. This is especially useful if you have remote stakeholders.
Not sure where to start? Ask Medius. We’ll guide you through your AP optimization options and narrow it down for you (no strings attached).
How to choose an accounts payable optimization service
Once you know what you need to make your accounts payable department more efficient, it’s time to find an accounts payable solution that works for you. There is a range of software and services available. We recommend choosing one that solves more than one problem at a time. Look for a service that automates a wide range of account payable processes including purchase orders, procurement, invoices, onboarding suppliers, tracking cash flow, and performance analytics. Consider an accounts payable integration that works with your existing systems. Not only will your accounts payable department benefit from process improvements, but so will all business verticals that collaborate with AP operations.
Medius offers a wide range of cloud-based accounts payable optimization services including payment automation, contract management, procurement and more. Our platform integrates with a wide range of business systems including Microsoft Dynamics, SAP, Infor, and more. Book a demo, free of charge, to see first-hand how Medius will save your accounts payable department time and money.