For many years, accounts payable (AP) has been a cost centre in most businesses. The primary role of this department is to make payments to suppliers, employees, contractors, and any other person or business who was owed money. Historically this function has been burdened by error-prone manual processes, slow payments, limited payment options, inadequate security measures, and a lack of integration between the company and its vendors. However, technology is now transforming these processes for AP teams, turning them into a more efficient business unit. Keep reading below to learn how your AP function can become more strategic and drive smarter collections for the business.
Automate invoice processing to prevent late payments
A recent IBM report named AP the “most automatable” function in any business. Amongst large finance teams, manual AP tasks can take up 44 per cent of their total time. These manual tasks include entering invoice information into the company’s financial systems, making payments, and reconciling transactions. When data is manually entered and processed through these systems, there can be a higher likelihood of errors, which leads to more costly invoice processing. In contrast, implementing an integrated payment system where every invoice and payment stems from a single source of truth facilitates more efficient invoice processing and speeds up cash flow across the supply chain.
Take advantage of flexible payment options
By using AP automation and integrated payment software, businesses can significantly enhance their invoice processing efficiency. This streamlined approach allows for faster handling of supplier invoices, reducing manual involvement. Moreover, businesses can benefit from a variety of flexible payment options that align seamlessly with their cashflow needs.
One such option is early settlement discounts. In exchange for paying an invoice before the due date, a discount is offered. Although the specifics of these discounts may vary across different businesses, consistently taking advantage of even small discounts can accumulate substantial savings over time. Furthermore, this practice fosters stronger relationships with suppliers, potentially leading to additional pricing efficiencies and improved trade terms.
Extended payment terms can also be a valuable addition and they allow AP teams to strike a balance between meeting financial obligations and maintaining liquidity. Credit cards play a crucial role in this strategy. When paying invoices, AP teams can use physical or virtual credit cards to delay the actual cash outflow by taking advantage of interest-free periods, or access to working capital offered by their provider. These extended terms provide a win-win situation, benefiting both parties involved.
Strengthen cashflow management
AP automation gives your business access to a more accurate data set which is essential for proactive cash flow management. By using a system that automates invoice processing and integrates with your accounting and ERP systems, the data can be visualised in a real-time cash flow analysis, showing decision-makers when payments need to be made. This allows for timely adjustments in either delaying or moving payments forward to best align with the company’s long-term objectives. Finance teams will also have the data to plan for future purchases and investments in growth.
Transform your accounts payable function today
Technology is driving transformation for AP teams. By replacing legacy manual systems and processes with sophisticated software that improves efficiency, reduces data entry errors, and facilitates stronger cash flow across the supply chain, AP teams can transform into a strategic, revenue-generating function that brings value to the business. If you’re looking to make your AP function more efficient and strategic, automating your AP processes is the best place to start.
Spenda’s AP solution features a user-friendly self-guided setup, allowing users to onboard themselves effortlessly and efficiently streamline their payables. Additionally, approved account holders have access to a range of payment methods, including the option to apply for an unsecured credit facility (using virtual credit cards) to pay business expenses. To ensure security, payments are protected by Spenda Wallet, a payment authorisation app that works seamlessly alongside Spenda AP. These two integrated products not only expedite invoice payments but also provide a robust defence against accounts payable fraud.
To set up a Spenda account and get 30 days free*, click HERE
Spenda is an integrated business platform that enables businesses across the supply chain to sell better and get paid faster. We serve as both a software solutions provider and a payment processor and deliver the essential infrastructure to streamline business processes before, during and after the payment event. Our connected platform displaces multiple, disparate systems in favour of one collaborative solution that improves transactional efficiency between businesses.
This article is for general information purposes only. Consult a qualified financial advisor regarding any changes to or decisions about your business’s finances.
*30 Days Free Terms & Conditions. By signing up, you are entitled to a complimentary 30-day trial of Spenda’s Accounts Payable software. This trial covers only software usage fees and excludes invoice payment processing fees. Following the trial period, you will be given the choice to upgrade to a paid account or to delete your account. Monthly software fees start at $250 per month. Enterprise fees are available on request.
