Accounts Payable Tips You Can Count On To Keep Finances in Order

Ever feel bogged down by bills? As a business owner, you should understand the frustration of providers who feel they have to move mountains to get the money clients (like you) owe them. If you feel like you can never get ahead with finances, it’s time to look to streamline your accounts payable system.

This is especially important in the recovering economic climate, when many companies are seeing growth. If your bookkeeping system fails to keep up, you could lose money that you’ve earned.

If that’s not enough of an incentive to get you thinking about streamlining your accounting operations, maybe some stats from the American Institute of CPAs will. The institute says companies with average accounts payable systems in place pay 10 times more per invoice than companies with top accounting departments. The numbers add up: It pays to fine-tune accounting structures.

Here are some tips for top accounts payable systems that might help you bring in some extra cash this year.

Assess the System and Boost Basic Practices
Before you can improve your accounts payable system, you have to understand how the current one works. What is the ritual when a bill comes in? Ideally, every bill should be entered into your accounts payable file daily.

Other foundations for a good system include filing credit card items on the same day they are expensed, ensuring employees are trained to file expense reports, segmenting different expenses to eliminate false reporting and retaining copies of bill stubs in an organized file.

If organizational issues are sometimes holding your employees (and your company) back, enterprise resource management software with an “internal bill” feature may help with record-keeping.

Know Your Cash Situation and Pay in a Timely Manner
This might seem counterintuitive, but procrastination may work in your favor when it comes to paying bills. When considering how to optimize cash flow, you want to maximize the operating money your business has at a given point in time. With this in mind, you should always consult a cash flow report before paying your bills.

For one, this will help you make sure you actually have enough money to pay off your bills instead of bouncing checks. But hopefully this will not be an issue, and cash flow can give you important insight about when to pay.

A good cash flow report will tell you how much money you will have left to operate your company once payments are made to your providers. This will help you set a strategic timetable for paying bills.

You can also establish a consistent payment schedule, like paying bills in chunks on a weekly or biweekly basis. If you use a software system, you can even set up an electronic payment schedule to automatically print checks on the days they need to be sent.

Create Checks and Balances to Balance Your Checkbook
Once you’ve established a fine-tuned payment system, you have to be ready to handle the occasional kinks – especially since accounts payable is commonly a fraud-prone point for many companies.

A simple way to avoid accidental fraud is to defer to a hierarchy for final steps of the payment process. Perhaps an entry-level employee can process checks, but an upper-level executive should be the one in charge of signing them before submitting payments. This creates a built-in review of payment amounts, and it makes a worker accountable to a supervisor for getting money in on time.

Once you’ve got a smooth accounts payable system down, you can stop worrying about paying money and start thinking more about how to make it.

About the Author

The Sage ERP team report on various topics related to ERP and business management.