Management Of Accounts Payable

How To Improve The Management Of Accounts Payable To Suppliers?

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The accounts payable department is of great importance for every company. They are in charge of following up on what is owed to suppliers, guaranteeing the approval of payments, and processing them. Having reliable information on accounts payable is essential to have an accurate balance sheet.

A satisfactory experience related to payment and billing issues can improve the relationship with account payable automation suppliers, and can even bring economic benefits such as discounts and extensions in payment terms.

This is why it is a task that goes beyond the processing of invoices. Payment management should be considered a fundamental task, where it is necessary to have the technological tools that simplify the process and free up time to dedicate to the strategy.

What is Accounts Payable Accounting

Broadly speaking, accounts payable automation solutions deals with incoming invoices. When a company has contracted, for example, certain services or placed an order with a supplier, the invoices issued by these companies go into the hands of the accounting department, which credits the accounts payable when an invoice is received and debits them when an invoice is received. the company pays off the debt.

Management Of Accounts Payable To Suppliers

Just as it is important to collect on time, you must also focus on payments. Failure to do so can lead to negative consequences such as fines or loss of supplier relationships.

It is a fundamental role for the business for 4 reasons:

  • They the ones who seek to maintain a good relationship with suppliers, making sure they paid on time.
  • They keep financial information up to date, to ensure that cash flow forecasts are accurate and working capital can be optimized.
  • Also, They seek to obtain favorable payment conditions and discounts.
  • They help prevent errors and fraud in the process.

Control is very important when managing accounts payable. The greater the number of suppliers that a company manages, the greater the probability of making an error at the time of payment and of wasting time in its management. In addition, on many occasions, it does not depend on the same team to be able to close the accounts on time. The conflict with traditional banking can also cause delays when paying or when requesting any necessary credit to do so.

For this reason, it is always advisable to have different options to solve these problems and avoid falling into fines or other types of problems.

Analyze all your Possibilities

When choosing who you want to work with, carefully study each of the options offered by each provider. Do not let yourself be guided only by the value of the products or services, but you must take into account what are the benefits that each one offers you, whether it is better payment options, discounts for wholesale purchases, deadline flexibility, delivery time, etc. quality, commercial responsibility or any other factor that may intervene in the choice.

Accounts Payable And Receivable In Financial Accounting

Creditor accounts are exactly the opposite of debtors’ accounts, dealing, as you might guess, with customers who have credit with the company or, what amounts to the same thing, have contracted debts with the company because they still have invoices open with her. From the point of view of creditors (suppliers of goods or services), when the company has not yet settled an outstanding invoice, it has contracted a debt with them.

Accounts payable and receivable constitute a recurring form of financing outside banking entities and it is common for many of the resources that companies need to function to be canceled by mutually agreed installments. Since a financial institution not involved, they represent a form of implicit financing without interest. In this sense, this type of credit should not confused with bank loans; in which a creditor relationship established based on interest.

Automation Of Accounts Payable To Suppliers

Once an invoice is received, it must be processed and organized for proper storage and payment. But, what happens when there hundreds of invoices received? The manual process is not scalable.

Companies that still manage accounts payable to suppliers manually lose hours in this process. This can lead them to have too much lack of control by having invoices everywhere (different emails; WhatsApp, printed sheets, different platforms, etc.), and to make mistakes in the payment.

Human error costs companies billions of dollars a year. Entering a figure incorrectly, forgetting to manage a payment (or several), duplicating payments to a supplier; are common mistakes when you do not have good control. All this can avoided by automating tasks such as payment management and payment storage and control.

Automation helps save time and money and can protect the business from costly mistakes. In addition, having real-time visibility of all invoices and payment status helps speed decision-making and better prioritization.

Financing In Accounts Payable To Suppliers

To take care of the liquidity of the company; it is important to spend time analyzing the invoices that must be paid as soon as possible. Not only because of the expiration date, is it also important to consider the type of purchase; the agreed conditions, and the relationship with the supplier in order to make the decision.

What happens when you do not have enough liquidity to pay? Late payments can have many negative implications. From affecting the supply chain by having an order cancellation; to fines for delay or losing a valuable supplier for the company.

The solution, use financing for accounts payable to suppliers. In this way, the capital that is needed for some situation of greater importance is not compromised; and the payment to suppliers is fulfilled in a timely manner.

Conclusion:

Fortunately, there are already companies like Yooz that offer accounts payable financing for any type of company. It is no longer necessary to depend on traditional banking; which often has very complicated conditions and is only accessible to large companies.

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