It would be ideal for your company to have dedicated channels or a streamlined process for reporting and sorting exceptions in invoices. Disputes can cause serious payment & time delays, sorting the issue with the supplier. Repeated disputes with a supplier would also mean having to look for a new one. If your company accounts payable management follows defined accounts payable best practices, you can track invoice statuses in real-time and ensure timely resolution of issues. It would also be in your company’s best interest to involve key personnel in the selection of suppliers, as part of an accounts payable and invoicing processing best practice.

Join us as we delve into the top 15 AP best practices that can transform your financial landscape. If you are looking for a way to automate your AP process, Klippa has the perfect solution for you, Klippa SpendControl. Vendor disputes can arise from various issues such as incorrect invoicing, delivering defective goods, or contract disagreements.

Strategy 3: Centralizing Vendor Management

However, there are ways that can lead you to significant cost and time savings and improved vendor relationships. This task is conducted by Accounts Payable teams, who perform three-way matching to confirm accurate details on each invoice before approving any payments. Once approved, vendors can expect payment in due time for their products or services provided.

You can do so by using a spreadsheet or accounts payable software to keep track of due dates, amounts owed, and payment statuses. Reducing verification steps and signature approval responsibilities can drastically reduce the length of the https://www.bookstime.com/ procure-to-payment time. Machine Learning of data capture processes allows your automation system to learn from usual elements of the process and to make meaningful suggestions on how to handle these elements automatically in the future.

Exception management

In addition, having robust systems in place and following accounts payable best practices gives you an accurate audit trail, and enables you to monitor the volume of invoices and payouts. When you work to standardize payment terms, you free up working capital, gain greater control over cash flow, and optimize payment processing. This is especially important when dealing with a high number of suppliers, each of whom wish to negotiate their own payment terms. It also prevents ad hoc negotiations with individual suppliers that can negatively impact your DPO, affecting the payable department’s bottom line.

However, businesses must enquire about these discounts as they are not often promoted. “Having the right analytics at hand, in a timely manner, has made all the difference,” said Geurts, who plans to capture more than $2.5 million in discounts this year. She also plans to prevent millions in potential duplicate payments and identify potential risk and fraud among suppliers. “Without analytics, insight, and continuous monitoring technology, your company is just flying blind.” Suppliers will often send a second invoice if the first one hasn’t been paid off quickly, and you can mistakenly end up paying for both. If you own a business that operates from multiple locations, there can be confusion about which location is paying which vendor invoice.

Keep Track of Your Accounts Payable Process

With AP Automation, Purple reduced the time to process invoices from eight days to three days. This allowed them to charge through their backlog of invoices without immediately hiring additional AP staff. This can be done by periodically reviewing vendor invoices and purchase orders, as well as reconciling vendor statements to ensure that all payments have been correctly recorded and accounted for. Another essential practice to improve your AP process is establishing a payment schedule. This includes outlining when bills are due, and when payments will be made to suppliers. Digitizing the AP process allows for a faster turnaround from invoicing to payment and gives a company options like discounts for early payment and avoidance of late fees.

• From saving time and cost to streamlining operations to improving accuracy, the list of advantages is long.
• It would be a good strategy for your accounts payable team to work closely with your procurement team to streamline and keep track of purchases, pay orders, 3-way matches and invoices.
• Digitizing the AP process allows for a faster turnaround from invoicing to payment and gives a company options like discounts for early payment and avoidance of late fees.
• If your software allows, make it mandatory to issue purchase orders for purchase transactions.
• EDI is an electronic communication method that allows for the seamless exchange of business documents, such as invoices, between trading partners.
• It becomes a single point of reference where all data is available, rather than necessitating multiple inquiry points.

AP automation can reduce the invoice processing time by up to 70%, while ensuring the accuracy and timing of payments. It’s essential that your AP department gave detailed rules in place, even with automation. Whether you are using automated software for your AP process or doing it manually, it’s essential to regularly check for errors, duplicate invoices, and duplicate payments to vendors. By taking advantage of early payment discounts provided by suppliers and vendors, businesses can reduce their accounts payable costs and boost their cash flow.

Strategy 10: Embracing Cloud-Based Solutions

Not only does it ensure that vendors get paid on time, but it has allowed Forge Biologics to take advantage of cash-back rebates and early-pay discounts. After explosive growth and demand in the company, Forge Biologics expanded from approximately 30 employees to over 200. But there was one department that couldn’t keep up, their accounts payable (AP) department. With positive supplier relationships at the forefront of their operations, Forge Biologics knew they needed to improve their AP process to maintain these relationships and ensure vendors got paid on time. Setting clear accounts payable KPIs will help your business to measure visibility into invoice cycles, data on vendors and spend categories, and fraud.

Cut down on how often you make checks and put all the information in one main place. When you’re ready to make checks, make sure each invoice has the right papers and approval signatures. This is one of the most paramount among this list of accounts payable best practices. Tracking the KPIs regularly is one of the crucial accounts payable best practices that need to be implemented.