In a world of accelerated technological advances where process automation takes greater prominence and reinvention is no longer optional, it is prudent to reexamine even the most basic activities to identify opportunities for improvement that provide greater strategic value.

Organizations that take advantage of Accounts Payable automation not only achieve operational excellence , they also provide greater value to the entire company: they lay the foundation for the development of business intelligence, reduce processing costs, improve liquidity, streamline approval processes, achieve a decrease in exception rates, a higher direct processing rate and greater transparency and control. Learn more about these benefits.

Recommendations to boost Accounts Payable

Although each company must take a customized approach to achieve its goals, there are best practices that can guide the way and bring with them a number of benefits:

• Centralize the processing of Accounts Payable in a collaborative environment that optimizes access to information and facilitates the generation of reports.

• Move towards a paperless processing environment without manual follow-ups. This allows for greater process traceability and smoother communication with suppliers when creating new purchase orders, electronically validating and accepting invoices, approving requests, tracking received goods, and paying invoices on time.

• Create supplier portals so that they can electronically follow the status of orders, delivery times, possible product shortages and payments received.

• Creating management workflows to help you identify and resolve system bottlenecks and streamline liquidity management as efficiently as possible.

• Strengthen purchase approval processes by defining the level of management authority necessary to make purchases of various sizes.

Keys to improve Accounts Payable

There are six main activities within the Accounts Payable function that, if optimized, can free up cash and strengthen working capital:

1. Supplier selection process

One of the first steps toward implementing a solid Accounts Payable system involves finding more and better suppliers that fit your corporate culture and help position your organization to negotiate the most favorable purchasing conditions. Within this process, there are several steps that can help you optimize your working capital:

• Keep supplier information organized , digitized and updated with collaborative cloud platforms.
• Carry out the technical, financial and HSE prequalification processes to select suppliers that fit your organizational requirements.
• Segment and prequalify your suppliers..
• Use platforms that give you the possibility of opening offers to new suppliers.
• Adopt a system capable of integrating with the ERP to manage associated suppliers.
• Digitally validate information and cross-check restrictive lists.

2. Supplier prequalification process

Once you have negotiated the requirements and conditions with suppliers, it is essential to ensure that they meet the technical and financial requirements and properly store that data. Having incorrect or outdated information can lead to payment errors , delays in accounts that prevent you from taking advantage of available discounts and even cause interruptions in the Chain.

3. Contract review process

To avoid inaccurate, or even fraudulent, supplier billing practices that could lead to excessive or duplicate payments, it is essential to periodically review supplier contracts. To do this, the use of a cloud platform allows you to streamline processes such as:

• Maintain control of execution by value and time, as well as policy approval.
• Link the ERP with a cloud system that helps you improve the visibility of information.
• Generation of modification and others.
• Administration, legalization, settlement and billing.
• Tracking record and news.

4. Hiring process

Some companies work with hundreds, or even thousands, of suppliers. Even if your environment is more streamlined, it can be challenging to keep track of all the invoices you receive and reconcile each invoice with its associated order. For this reason, it is essential to monitor internal purchasing practices to ensure that you work with pre-approved suppliers and stay within authorized spending limits. These are some processes that can be streamlined at this stage and some strategies you can apply:

• Track outstanding accounts payable by supplier and payment term, as well as measure supplier compliance at the delivery level.
• Evaluate the supplier with additional criteria and registration of post-sales requests.
• It allows the interaction of the supplier, logistics operators and buyer for online tracking and expediting of purchases of goods.
• Tracks design, manufacturing and testing , as well as import, nationalization and delivery logistics.
• Issue purchase orders for each new order , so you can validate received orders, set payment terms in advance, and track invoices against existing purchase orders to ensure suppliers are billing accordingly. with the agreed conditions.
• Maximize your savings potential by exploring the feasibility of any early payment discounts , volume rebates, or business expense initiatives based on your capabilities.
• Establish clear metrics for accounts payable (such as the frequency of invoices that match orders, the percentage of invoices paid on time, and the percentage of discounts negotiated) and adhere to them across the organization.

5. Approval process

Properly and efficiently monitoring your organization’s Committees and tasks is another way to improve efficiency and contribute to liquidity. Here are some strategies to keep in mind to improve processing:

• Manages the different internal committees, linking each of the requirements in an integrated environment.
• With a cloud platform, you can keep data in one place and automatically issue minutes, indicators and reports. As well as maintaining a digital record of expense approval.

6.  Accounting and information process

Before you can actively manage accounts payable, you must ensure that accounting reports are up-to-date and that financial records accurately reflect current accounts payable balances. Without this data, many companies lack visibility into how much, how often, and when they pay their suppliers. This may prevent you from choosing the most advantageous payment terms or selecting the right time to pay suppliers. In order to make strategic decisions based on data, it is important to have a platform that allows you to:

• Access historical information to analyze expenses, as well as times and service levels.
• Greater traceability of transactional data and audit reports.
• Easily access strategic supply indicators.
• Analyze historical behaviors and diagnose supply processes.
• Visualize trends and patterns to forecast behavior in operations.

Source: Deloitte