Are you buried under a mountain of invoices? Many accounts payable managers experience stress and frustration because of inefficient processes and ineffective practices. Here are some tips to improve the performance of financial departments.
There is a growing awareness amongst employers to develop employees to become proficient in managing the business payment cycle.
According to accounting specialist Carel Spies “the effective functioning of the Accounts Payable department has an astronomical impact on the rest of the business”.
Many employers are realizing the importance of this function primarily because of the benefits witnessed in companies who apply efficient financial and Accounts Payable processes.
Good financial and Accounts Payable controls keep suppliers happy. A large part of the business relationship with suppliers is based on the financial interactions with these stakeholders by the Accounts Payable Department.
If suppliers are regularly paid late or experience problems with the Accounts Payable department the relationship will suffer.
Alternately if suppliers are paid on time the relationship will flourish which will create space for negotiation. When trust and reliability exist in a partnership, both parties will be eager to maintain the working relationship, opening the path for compromise and increased mutual benefits.
In many industries competitors make use of the same suppliers. If rival companies are failing to manage their payments efficiently this becomes an area for businesses to get an edge over competitors.
Another benefit is the effective management of ‘cash flow’. This is important as it helps senior executives spend money wisely.
During the 2-day Accounts Payable Processes & Best Practices course Spies addresses these points and introduces the 10 commandments of checking invoices. The first five include the following:
Every invoice must have a purchase order number which must agree with the PO
The unit price on the purchase order must agree with the invoice
The quantity on the purchase order must agree with the invoice
The total invoice value on the purchase order must agree with the invoice
The product description on the purchase order must agree with the invoice
He also provides tips on how to avoid time wasters in the Accounts Payable department.
Duplication of tasks is one time waster. To prevent duplication clearly define the roles and tasks of employees. “The team must know their individual responsibilities”.
Missing invoices are a common occurrence in the Accounts payable department and can cost the company time and money. Spies advise those who are responsible for processing invoices to review their recons of outstanding invoices earlier in the month as opposed to waiting for the end of a financial period.
Calls to clients and other stakeholders regarding incorrect invoices and statements may seem to be an accepted part of the accounting and Accounts Payable function but according to Spies this is another time waster.
Research shows that one hour per day is wasted on the phone. Convert that time to billable hours and the expense to business starts to add up.
The process of matching purchase orders with invoices manually also provides an area for mistakes to occur.
For more insights join the Accounts Payable Processes & Best Practices course held by Alusani Skills & Training Network®. Please contact Alusani® for the latest dates. You can save up to R2000, when you register and pay early!