Here Are The Ways That Accounts Payable Affects Your Whole Company
It’s easy to think of accounts payable as nothing more than the department where money leaves the company to pay for goods and services. But there’s more going on in this department than just paying the bills. In fact, there are actually several ways that accounts payable (AP) affects and influences the entire company.
The Cash Flow Connection
Cash flow within a company plays a huge role in its success. If you’re not cultivating a positive cash flow environment (where your company’s liquid assets are increasing), you’re not going to be able to cover all your expenses with the money your company brings in. Negative cash flow sends your company toward (or deeper into) debt and leaves you at the mercy of future financial crises.
The accounts payable department plays a key role in your company’s approach to cash flow management. A well-managed, efficient AP department lets your company structure payment terms with vendors that work to your advantage. They also give you a picture of how much money your company owes and when bills are due. And that gives you key insights into the present state of cash flow in your organization.
Maintaining Vendor Relationships
Accounts Payable isn’t the only department that works with your company’s vendors and/or suppliers. But it plays a key role in maintaining positive vendor relationships. In fact, you can think of the AP department as a liaison between your company and vendors.
The AP department can take the biggest steps toward building trust with your vendors. This is the department that makes sure they get paid on-time, negotiates flexible payment terms, and responds to vendor questions about your company’s payment policies. If your customer service is good in your AP department, you’ll end up with loyal vendors who might even negotiate discounts for your company.
Streamlining Audit Completion
Audits are something every company has to deal with, and they affect the whole organization. The accounts payable department is key to helping determine how an audit goes. An AP department that is careful to maintain complete, organized records makes the entire audit process go far more smoothly than it might otherwise.
Clearly, businesses can’t afford to overlook the key role that accounts payable plays in company success. And because the AP department affects such key areas of the organization, you need to invest in keeping that department running smoothly. With accounts payable automation software, the AP department can give your company more control over cash flow. The software also makes it easier to provide good customer service by creating a vendor self-service portal. And it makes audits easier by automating record-keeping and making all records readily accessible as searchable, digital files. To learn more about how AP Automation can help your entire organization, get in touch with NextProcess today.