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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 your company to pay for goods and services. It’s not very glamorous or exciting. On the surface, it might not even seem that important for the overall success of your business. Sure the bills need to be paid on time, but beyond that AP doesn’t do much. Right?
Not exactly. When you look at accounts payable a little more closely, it becomes clear there’s more going on in this department than just paying the bills. And even if it was just about “paying the bills,” doesn’t how you manage outgoing money affect the entire company?
Your accounts payable department influences the entire company. Much of this impact has to do with cash flow. AP also plays a huge role in your company’s relationships with vendors and suppliers. You can use it as a cornerstone for collaboration within your company. And it’s hugely influential in how well audits go. Keep reading to learn more about how the accounting department affects your whole business.
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. It also 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.
You can put accounts payable to work for your organization by using it to gain insight into cash flow and improve cash flow management. To do that most efficiently, though, you’ll need an AP management system that lets you track your company’s finances in real-time and quickly access financial records. Automating the accounts payable department is the best way to improve the accuracy and accessibility of your records. Automation software also gives you the tools you need to oversee and manage cash flow more efficiently.
Maintaining Vendor Relationships
Accounts payable isn’t the only department that works with your company’s vendors and/or suppliers. However, there’s no denying that AP plays a key role in maintaining positive vendor relationships. In many ways, it helps to think of the accounting department as a liaison between your company and vendors.
AP is the department that 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 accounts payable, you’ll end up with loyal vendors. They might even be willing to negotiate with your company and offer benefits like discounts or flexible payment terms.
Automating your AP processing also helps improve relationships with vendors. If you use a program like NextProcess, you can set up a vendor self-service portal. This makes it easy for your vendors to update their information, submit invoices, and look up whether or not you’ve processed their invoice yet.
Collaborate With Other Financial Departments
Accounts payable can act as your starting point for coordinating with other financial departments. If you’ve decided to automate accounts payable then there’s a good chance you’re planning to automate other departments as well. When you automate several departments using software from the same supplier, you’ll enable improved collaboration throughout departments.
Here at NextProcess, we often see companies come to us for accounts payable software as well as programs to automate other business processes including purchasing, travel and expense, and capital project management. All our software can work together (or separately) to create financial process automation that improves your entire company. It also integrates seamlessly with your existing ERPs.
For example, when you automate both purchasing and accounts payable the two departments can work together to improve vendor and/or supplier relationships. Those are the departments that spend the most time interacting with your vendors. Together, they can work to improve other companies’ perceptions of 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. If accounts payable is prepared to make audits go smoothly, your entire company benefits. An AP department that is careful to maintain complete, organized records makes the entire audit process much simpler than it might be otherwise.
If you want to improve your accounts payable to streamline audit completion, automation software helps with that as well. A web-based automation solution increases transparency so auditors can quickly access all your records. Plus, storing records in an accessible digital format speeds up the audit process. It also makes it easier for your business processes to continue during the audit. Finally, your software system can help verify regulatory compliance and avoid post-audit issues.
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 an organization, it’s important to invest in keeping that department running smoothly.
With accounts payable automation software, accounts payable 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 or schedule a free demo, get in touch with NextProcess today.