Are You Forgetting To Work On Your Accounts Payable Workflow?
By Ryan Velez
As an entrepreneur/small business owner, different aspects of the business are always jockeying for space in your mind. Generally, marketing, sales, and delivery of services are key, but never neglect the way you pay for bills as well as how you afford to pay for them. This is determined by your accounts payable plan and strategy, and there are many reasons why you want to have an effective one.
If you don’t have a proper account payable set up, you will have poor cash flow, harming your company’s ability to take advantage of opportunities when they come. There is also the potential to affect your relationship with vendors or limit your access to credit. So, how do you put this together?
For one, take the planning seriously. Your accounts payable strategy should include a clear guidance as to how purchases and payments are approved, and by whom. Rather than simply delaying paying bills as long as possible, you want to take into account discounts for paying early or relationships with vendors who have their own rules or guidelines. In the same vein, delegation is important. Don’t pass the oversight of these processes to someone without a significant stake in the company. Generally, the business owner or a trusted manager is ideal. On top of this, it is recommended to bring up accounts payable activities in routine business meetings, the same as any other aspect of the business. Make sure that the activity is easily accessible so people can keep track of this.
By the same token, automation is important as well, but to do so, you will need to create a network to do it. A good way to start is by going paperless. Remove all of the company’s analog bills and payment activities, and deal with them completely online. The next step is automating your purchase and payment approval processes, before making your accounts payable activity cloud based, secure, and easy to access.
So, while many put accounts payable as simply “paperwork” or “paying the bills,” you should treat it as a vital component of your cash flow. Utilizing these techniques will help put your business on the right path.