In a world of accelerated technological advances where process automation is taking center stage 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 the automation of Accounts Payable not only achieves operational excellenceThey also provide greater value to the entire enterprise: 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 straight-through processing rate and greater transparency and control. Learn more about these benefits.
Recommendations to boost Accounts Payable
While each company must take a customized approach to achieving its objectives, there are best practices that can guide the way and bring with them a number of benefits:
- Centralize Accounts Payable processing in a collaborative environment that optimizes access to information and facilitates reporting.
- Moving towards a paperless processing environment and without manual follow-ups. This allows for greater traceability of the process and smoother communication with suppliers when creating new purchase orders, electronically validating and accepting invoices, approving requisitions, tracking goods received and paying invoices on time.
- Create supplier portals to allow them to electronically track order status, delivery times, possible product shortages and payments received.
- Creation of management workflows to help you identify and resolve system bottlenecks and streamline liquidity management as efficiently as possible.
- Strengthen purchase approval processes defining the level of management authority required 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:
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 you 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:
- Maintain organized supplier informationThe company's business is digitized and updated with collaborative platforms in the cloud.
- Performs the technical, financial and HSE prequalification processes. to select suppliers that fit your organizational requirements.
- Segment and pre-qualify your suppliers.
- Uses platforms that give you the possibility to open offers to new suppliers.
- Adopts a system capable of integrating with ERP to manage the associated suppliers.
- Digitally validates the information and restrictive cross-listing.
2. Supplier pre-qualification process
Once you have negotiated the requirements and conditions with the suppliers, it is essential to ensure that they meet the technical and financial requirements and store those data appropriately. Having erroneous 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. Contractual review process
To avoid inaccurate or even fraudulent supplier billing practices that may result in overpayments or duplicate payments, it is essential to periodically review supplier contracts. To do this, using 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 to improve the visibility of information.
- Generation of modification and others.
- Administration, legalization, liquidation and invoicing.
- Tracking and news log.
4. Recruitment process
Some companies work with hundreds, even thousands, of suppliers. Even if your environment is more streamlined, it can be a challenge to keep track of all the invoices you receive and reconcile each invoice with its associated purchase order. Because of this, it's critical to keep track of internal purchasing practices to ensure you're working with pre-approved suppliers and staying within authorized spending limits. Here are some processes that can be streamlined at this stage and some strategies you can apply:
- Track outstanding accounts payable by supplier and payment terms, as well as measuring supplier compliance at the delivery level.
- Evaluates the supplier with additional criteria and registration of post-sale requests.
- Allows the interaction of the supplier, logistics operators and buyer for online tracking and expediting of goods purchases.
- Track design, manufacturing, and testingas well as import, nationalization and delivery logistics.
- Issues purchase orders for each new orderThe system allows you to validate orders received, set payment terms in advance and track invoices against existing purchase orders to ensure that suppliers invoice according to the agreed terms.
- Maximize your savings potential by exploring the feasibility of any prepayment discountsWe offer volume reimbursement, volume-based reimbursement or business expense initiatives according to your capabilities.
- Establishes clear metrics for accounts payable (such as the frequency of invoices matching orders, the percentage of invoices paid according to deadlines and the percentage of discounts negotiated) and to comply with them throughout the organization.
5. Approval Process
Properly and efficiently tracking your organization's Committees and tasks is another way to improve efficiency and contribute to cash flow. Here are some strategies to consider 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 keeping a digital record of spending approval.
6. Accounting and reporting 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 can prevent them 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 time and service levels.
- Increased traceability of transactional data and audit reports.
- Easy access to strategic sourcing indicators.
- Analyze historical behaviors and diagnose supply processes.
- Visualize trends and patterns to forecast trading behavior.
Source: Deloitte
