It is relatively easy to think of AP as nothing more than the team where money leaves your organization to pay for goods/services. On the surface, this might not seem essential for overall business success. The bills must be paid on time, and ahead of that, accounts payable does not do much. But this isn’t true.
When you look at AP more closely, it becomes clear that more things are happening in the department than just paying the bills. This team influences the entire business. Much of the effect has to do with cash flow. Plus, accounts payable plays a pivotal role in your organization’s relationships with the suppliers. You can utilize it as the cornerstone for collaboration with the business. And it is influential in how well audits go.
Maintaining Robust Supplier Relationship
Accounts payable plays a significant role in maintaining a good relationship with your vendors It helps to think of the accounting team as a liaison between the organization and suppliers in multiple ways. The department can take the critical steps towards building trust with the suppliers. It ensures that the suppliers get paid on time without delays, negotiates flexible payment terms, as well as responds to questions about the organization’s payment policies.
If the client service is good in AP, you will end up with loyal providers. They might also be willing to negotiate with the business and provide benefits, such as flexible payment terms or discounts. Accounts payable automation software helps you to set up a self-service portal for suppliers. It becomes easy for them to upgrade information, submit invoices, and check whether you have processed the invoice.
Every company has to deal with audits, and they impact the overall company. The AP department is the key to helping determine how the audit goes. If accounts payable is ready to make audits go seamlessly, your entire organization benefits.
A cloud-based accounts payable solution enhances transparency so that the auditors can access all the records easily. Moreover, storing records in an accessible digital format accelerates the audit procedure. Plus, it becomes easier for the business processes to continue during the audit. And finally, the AP software system can help validate regulatory compliance and prevent post-audit problems.
Managing Cash Flow
Cash flow inside an organization plays a significant role in its success. If you are not cultivating a positive cash flow environment, you will not be able to cover the expenses with the money your business brings in. Negative cash flow sends your business towards debt and leaves you at the financial crisis’s mercy in the long run.
The AP team plays a major role in your company’s approach to cash flow management. An effective AP team allows your organization to structure payment terms with suppliers that work to your benefit. They also provide you a picture of how much amount your business owes and when bills are due. This gives you complete visibility into the present state of cash flow in the company.
You can put AP to work for your business by using it to gain granular insight into cash flow management. In order to perform that effectively, you will require a robust accounts payable management solution that allows you to monitor the business’s finances in real-time and access financial records quickly. Accounts payable automation is the best way to boost the accuracy and accessibility of your records. It also provides adequate tools that you require and handle cash flow more effectively.
Team Up with Finance Department
AP can act as the starting point for teaming up with other financial departments. If you have decided to automate accounts payable, then it is the right time for you to automate other teams too. While you automate other departments leveraging the same vendor’s solution, you will enable enhanced collaboration via teams.
Many organizations want to automate their AP, along with other business methods including travel and expense, purchasing, and capital project management. All the solutions can collaborate to generate financial process automation that enhances your entire organization. Plus, it integrates with your existing ERPs seamlessly.
For instance, if you automate both AP and purchasing, these two teams can work together to boost supplier relationships. These departments spend most of their time communicating with vendors. And they can work together to enhance other organizations’ perceptions of your company.
Companies cannot afford to overlook the major role that AP plays in their success. The accounts payable team impacts many areas of a business. It is essential to invest in keeping that team running seamlessly. The AP software solution makes it easier to offer excellent client service by generating a supplier self-service portal. Plus, it makes audits easier by automating record-keeping and making records searchable, digital files.