Handling and managing accounts payables (AP) is barely considered a core business function. Unfortunately, most real estate businesses focus more on marketing strategies and making sales than managing accounts payable properly. However, poor management of the process can ruin a businesses’ relationship with vendors and limit its access to credit facilities. So, what are the best practices to optimize your AP process?
Top 4 Practices to Optimize your AP Process
1. Identify Inefficiencies in the AP Process
A lengthy AP process that requires several touches or entries by different people before completion is prone to costly errors. So, the first step towards achieving AP optimization is to study your accounts payable process from the beginning to the end. Identify tedious steps that result in inefficiencies. Research and apply solutions that eliminate the inefficiencies such as automating the steps and applying dependable electronic processing techniques. To benefit from a shorter and faster accounts payables process, adopt a customizable workflow approval process.
2. Integrate the AP Process with Your Current Accounting System
When studying solutions that allow you to optimize your AP process maximally, ensure that they can be integrated with your current accounting system. A seamless AP and account system integration facilitates automatic posting of transactions in a bid to eliminate errors resulting from manual process updates.
3. Adopt Electronic Technologies and Services
Most companies do not support total process automation due to unique business accounting standards. On the other hand, it is difficult to operate a fully manual process. Hence, businesses must adopt electronic services and technologies that integrate with their existing AP process. Such a system allows you to receive electronic payments from suppliers as well as receive any confidential payments manually without causing process errors.
4. Make AP a Management Responsibility
As noted above, failing to manage cash outflows effectively can lead to debts and a poor financial reputation which is detrimental for any business. Therefore, the accounts payables process should be handled by either the business owner, a trusted top manager or a person who holds a significant stake in the company. Additionally, accounts payable activities should be discussed in regular business meetings to ensure that the business is always working towards optimizing the process. All AP activities should be easily accessible via mobile systems and computer networks.
The Accounts Payable process is a crucial business component that affects cash flows. Therefore, proper management of the process ensures that your business has optimal cash on hand. It also helps in boosting your company’s creditworthiness and trust among construction material vendors. As such, it is advisable to outsource accounts payable process to a trusted, reputable and experienced firm that will help you maintain reasonable cash flows.