How to Set Accounts Payable Objectives Using Automation
- 20 May 2020
The accounts payable department is responsible for many influential factors that contribute to the overall financial well-being of an organization because it oversees the flow of money out of the organization. Accounts payable objectives include making timely vendor payments, maintaining accurate data, nurturing positive relationships with suppliers, and researching ways to save money and improve the bottom line. All of these objectives help guide the overall accounts payable process.
The intelligent use of accounts payable automation ensures the highest level of efficiency and accuracy at every level. The process data available in modern AP automation solutions makes it possible to establish measurable, trackable, more definitive and meaningful goals for improved productivity and profits. Discover more about the objectives of accounts payable, and how AP automation is changing the role and responsibilities of AP professionals.
The Role of Accounts Payable
For generations, accounts payable processes were performed manually. Routine tasks were tedious and time-consuming, necessitating hours of detail-oriented work. Accounts payable automation transformed the way the AP team operated. General functions were automated, changing the role of the modern AP professional. Today AP professionals are the face of financial interactions, maintaining positive vendor relationships and seeking discount opportunities. Additionally, AP professionals have a finger on the pulse of the financial health of the organization with real-time updates. The C-suite and AP department work together to find ways to save money and generate more working capital.
The accounts payable department has become a hub for the financial health of the entire company. With cloud AP automation, updates are available as the data is entered into the system. From the AP team to the C-suite, everyone has access to pertinent data as it happens. AP professionals are using their time to improve supplier relationships and reduce costs. AP automation ensures payment information is updated, invoices are processed, and financial data is accurately shared in real-time to help management make empowered and educated decisions.
Watch the Clock
One of the most significant objectives of the accounts payable department is the timely processing of vendor invoices. During the time of manual processing, it could take days or weeks to get an invoice approved. The invoice might sit on the desk of a key employee, waiting for review. Now approvals can be processed online in just seconds, saving time and effort. And, time is of the essence in the accounts payable department. Late payments often mean paying late fees and other penalties, costing the organization more for the product or service than it should.
Continued late payments may lead to less than satisfactory payment arrangements in the future, higher costs for the same products or services, and termination for the relationship due to continued late payments. Missed invoices and late payments can lead to serious consequences. For example, failure to pay could end a key vendor relationship, resulting in an interruption of operations and production. Accounts payable automation helps to shorten turnaround times because approvals can be done anytime and anywhere. Instead of waiting to get to the desk and review a paper invoice, the work can be done online immediately.
Another objective of accounts payable is to utilize all resources wisely for maximum efficiency. To ensure everyone is working together seamlessly, employee training is crucial. Employers need to take time to explain all the features of accounts payable automation to encourage employees to use them to the fullest. Robust features enable the AP team to process invoices in a fraction of the time it takes to do it manually. Once the AP team knows how to use automation, they can take advantage of a full range of time-saving and money-saving features.
Additionally, implementing AP automation is a smart way to attract better talent to the company. Millennial professionals prefer to work for companies that know how to use technologies to improve operations. Experienced AP team members recognize the need to maximize human resources in this busy department, and AP automation makes the job easier and faster.
A Higher Level of Support
Accounts payable is no longer a back-office function. Since the reduction of manual tasks, AP professionals have come to the forefront of financial operations, supporting the C-suite and all other accounting functions. With access to pertinent financial updates in real-time, the AP team plays in integral role in helping to determine the overall fiscal health of the organization. AP professionals previously busy doing manual work can now focus on more strategic initiatives that better support the overall business goals. Real-time financial data helps the finance team report on key updates such as cash flow, accruals, and forecasts with greater accuracy. Increased visibility into the overall financials helps reduce costs and boost the bottom line.
When it comes to financials, accuracy is crucial to be profitable and trustworthy. Failure to maintain accurate records makes an organization look disorganized and poorly managed. Inaccurate invoicing can strain vendor relationships and lead to additional costs for the organization, such as late fees and penalties for missed payments.
AP automation provides real-time updates to ensure the highest level of accuracy at all times. In just seconds, anyone with authority in the organization can get a realistic financial picture of what is happening right now. This data is crucial to make accurate projections for the future. Companies harnessing the power of this technology are saving time and money, improving accuracy, and maintaining positive supplier relationships.
Missed payments, overlooked discount opportunities, and chances to improve vendor relations all help to lower costs when detected. With AP automation, the AP team has more time to cultivate vendor relationships and find discount opportunities for early payment and frequent or bulk purchases.
The implementation of AP automation pays for itself over time. AP automation tools can provide visibility of process performance and bottlenecks to help find and optimize ways to reduce operational costs and improve the bottom line. Summarize the objectives of AP and how automation helps people achieve them.
The modern AP department does more than pay invoices on-time. AP professionals have emerged from the back-office to provide essential insights about the financial health of the organization, as well as find opportunities for money-saving discounts. AP automation put financial data at the fingertips of everyone in the company in real-time, so approvals and updates can be done quickly and efficiently. With AP automation, organizations are realizing how attention to detail the AP department can help to significantly boost the bottom line.