Business

Transforming Accounts Payable: Opportunities, Challenges, and Next Steps

Many business owners feel manually approving and processing invoices a mundane job that consumes a lot of time too. According to the Institute of Finance and Management (IOFM), about two-thirds of businesses invest in AP automation. 88% of companies likely to remove more than one-fourth of the paper-based supplier invoices within the coming three years.

 

Given the always-increasing growing competition, businesses are determined to manage accounts payable accounting efficiently. For this, they need to streamline AP functions, manage outbound cash flows better, focus on limiting expenses, and increasing financial agility.

 

Opportunities You Can Lock by Managing Accounts Payable Effectively

 

Have a proper system in place to manage payments, and here, the most important thing is accuracy. When it comes to AP management, you must ensure you are paying only accurate and legitimate invoices. This way, you will not pay extra money for duplicate or repeated invoices. Whenever you process invoices, always ask yourself the following questions;

 

·      Is the invoice reflecting the exact item your company ordered?

·      Has your company received the order?

·      Are item units and cost calculations correct?

·      Is tax added correctly?

 

Make sure these details are right so that this information will help you ensure your AP process’s integrity and accuracy. If this information is correct, you will get opportunities to save a lot by not paying extra due to any mistake or error or avoiding late payment fees by making payments on time.

 

Common Challenges Faced by Businesses while Managing Accounts Payable

 

1. Errors in Valuable Financial Information

 

Data entry is one of the most tedious and time-consuming tasks in AP besides approval and payment processing. Although manual data entry seems a very easy-to-do job, it requires many resources and is prone to several errors/mistakes.

 

If your company relies upon paperwork at all stages of the AP process, human errors are likely to be exponentially more.

 

2. Data Management

 

AP activities generate a large number of essential documents that you need to store for a long time due to compliance requirements. The bigger your business is, the greater the number of documents you need to keep. Document management is costing you a lot of money, but with time, it might become more difficult for you to track and manage necessary data you will require in times of need.

 

All of this might negatively impact your AP staff’s efficiency in the long run, leading to a reduction in financial transparency.

 

3. Complicated Invoice Processing

 

Purchase orders may require the approval of multiple authorities, involving several departments, making the chain of approvers long; this is where things can get complicated and slow down the payment process, increasing internal processes and communication costs. A purchase order may pass through 5-6 people.

 

Meanwhile, the information can get distorted, leading to business/financial decisions made based on data that is not sure-short accurate.

 

4. Payment Delay

 

Paying your suppliers late can hamper your relationship with them. The supplier may not do business with you again or may put a penalty for late payments. If not, it will damage your company’s reputation in the market and the trust your customer base has in you. This is a big reason why several businesses outsource accounts payable services to reliable accounting firms.

5. Cybersecurity Threats

 

You might be familiar with technologies that help you manage financial accounting for your business, or you might be using a few. However, you also must know that your accounting system’s digitization doesn’t mean your financials are totally safe.

 

Your company’s accounts and financial information is always prone to cyber fraud. For example, scammers/fraudsters can hack your business accounts by sending a tricky email to your AP staff and sending your money into their accounts in just two minutes.

 

Next Best Steps – Improving the Below-discussed Processes to Manage AP Better

 

1. Vendor Selection

 

One of the initial steps you can take toward having a robust AP system is to set up a list of suppliers you prefer. This will help you prevent making low-quality purchases and get your company in a position to negotiate buying terms that would be most favorable to you. Improve your vendor selection process;

 

·      Set priorities for vendor negotiation, and make sure you involve all key people and decision-makers of your company; for instance, CFO and CPO.

 

·      Always look for opportunities where you can negotiate better pricing. For this, you can ask suppliers to offer lower prices as provided to others, or you can negotiate for discounts on large volume orders.

 

2. Set-up a Supplier Master Data

 

After negotiating terms with suppliers, it becomes necessary to capture and maintain all supplier data properly. Remember that inaccurate data can lead to poor decisions and prevent you from leveraging discounts available, or may also disrupt the supply chain.

 

·      Make sure all SLAs – service level agreements are clearly mentioned in your supplier management systems.

 

·      Besides other information, the master data must reflect product/service details, delivery timelines, quality standards, supplier obligations, and all other regulatory compliance mandates that are generally applied as per your locality.

 

·      Store supplier contracts properly in a secure place.

 

·      Online document management systems can help make this process streamlined and make it easier for you to search for information when needed.

 

3. Contractual Review

 

You might want to prevent fraudulent activities in your billing process, which may lead to duplicate payment or overpayment. To do this, you need to review contracts regularly.

 

·      Create a master data team responsible for checking the accuracy, order completeness, and compliance with terms. 

 

·      Apart from that, this team should also review suppliers’ performance so that the suppliers always meet contractual terms.

 

·      You should also include clauses that hold suppliers accountable for penalties if they are underperforming.

 

·      You should do periodic supplier contract reviews on time and compare their performance with each other, in addition to comparing contracts with others in the industry.

 

4. Invoice Processing

 

Properly managing the entire invoice processing is a great way to improve liquidity. Inaccurate invoices should be sent back to suppliers; you may refuse to pay invoices that contain wrong costs, item quantities, postal address, etc.

 

·      Process invoices on time and prefer to include a date stamp to validate it.

 

·      Make sure you complete invoice processing while keeping in mind the defined internal SLAs – for example, processing invoices within a week of receipt.

 

·      Regularly review the AP aging lists in order to determine if the appropriate follow-up actions are being taken or not.

 

·      Have an EDI system to allow suppliers to send invoices electronically.

 

This way, you will also be able to track invoices easily against their associated Pos, validate and approve payments, and maintain accurate AP records.

 

5. Financial Accounting & Reporting

 

Before you focus on managing your payables, you need to make sure that your accounting statements, reports are correct and up-to-date and your financials are reflecting the AP balances fairly. In the absence of this information, your company may lack visibility into how much you make payments to your suppliers and when.

 

To improve your financial accounting and reporting process, follow the below-described tips.

 

·      Ensure billing accuracy – for this, you should validate invoices against contract terms.

 

·      Automate reconciliation work – improve real-time reporting capabilities and make sure to continue them in the long run.

 

·      Have the same team to prepare and review the reconciliation work in order to reduce the chances of overpayment and duplicate payments.

 

Conclusion

 

By making improvements in AP governance, setting up clear policies and management processes, and consistently following key metrics, your company can streamline almost all business processes. If approached correctly and effectively, you can strengthen cost management, eliminate process complications, reduce financial fraud risks, and enhance supplier contract compliance and relationships.

With complete support from executive-level employees, these above-discussed points can help you do way more efficiently than just managing the AP process. Besides, all of this can help you bring greater liquidity, leading to better business performance and a healthier bottom line.

 

How to Elevate Your Brand With Custom Kraft Boxes

Engaging yet Outstanding quality Custom Kraft Boxes:

Kraft paper is one of the best materials used in the packaging industry. It is low in cost, eco-friendly and nature friendly as well. Kraft paper is 100% organic in nature and biodegradable. It can easily be decomposed in the environment without lasting any bad impression. Outstanding extraordinary Custom Kraft Boxes are not only strong enough to grab the product without any difficulty but helping in sustainable developmental goals. Kraft paper boxes wholesale are a preferable option when you are looking for low-cost packaging without compromising on quality.

 

Kraft Boxes is the most preferred Biodegradable Stock:

Kraft boxes are eco-friendly, pocket-friendly, and user-friendly.  Kraft is the most preferred material to use in the packaging industry. It can easily be decomposing. Sustainability influence, quality matters. They are available in different styles and designs such as:

• Window die cut

• Kraft pillow design

• Kraft cake boxes

• Kraft paper handle boxes

• Foldable Kraft paper boxes

• Kraft tuck top boxes

• Kraft sandwich boxes

• Kraft mailing boxes

• Kraft gable boxes

• Kraft die cut with PVC bags

 

 

Recognize Custom Kraft Boxes can be utilized for Limited time Purposes:

Custom kraft boxes with logos can make your product recognizable and acknowledged. Kraft boxes are strong enough to handle products easily and conveniently. They can be utilized for short time duration and easily disposed of. The material used in the manufacturing of the packages is recyclable and bio-degradable. It proved as a game-changer for the packaging industry. The basic color available in kraft boxes is brown color but with the help of the bleaching process, it can be turned into different colors and designs. These colors are harmless to the product inside and reliable in nature.

Kraft Boxes to Successfully Advance Your Business:

Kraft boxes are cost-efficient and pocket-friendly. Within a low budget for packaging, you can easily grab the attention of the customers and improve sales and develop your business within no time. It can help you create a long-term impression in the minds of customers with innovative printing on the kraft papers regarding your business. They are super friendly in nature to boost your business. Eco-friendly custom kraft boxes with logo imprint on the walls can help you in advancing your product and considered as one of the best advertising techniques in marketing.

 

 

Sturdy Packaging Alternatives for Significant Distance Transportation:

Kraft boxes are organic and nature-friendly. They are free from any type of allergens or toxins that maintain safety standards. Kraft boxes can be used in gift packaging, soap packaging, cosmetic boxes, food boxes, and all other types of products. They are sturdy enough to carry them for a long distance. They are strong, reliable, and durable enough to absorb far away distances without any obstacle. They are recyclable and can be used again and again which makes them super cost-efficient in nature. They are the best way to show your environmental concerns regarding ever-increasing pollution and global warming and play your role in this regard to check it on time.

 

Why Choose Us:

PackagingNinjas is a hub of packaging manufacturers that provide you best solution and iconic, idealistic custom kraft boxes with huge discounts and offers. We are not compromising on the quality of packaging and help you improving sales and developing your business. If you can’t find the desired option there, feel free to contact us without any hesitation. We will be pleased to serve you with our professional team.

 

 

Few Benefits Of a Transportation Management System?

A Transportation Management System belongs to the supply chain subcategory that includes execution, optimization, planning regarding substantial goods to shift one place to another. To further describe, you need to be part of a logistics program that enables you to optimize and organize everyday tasks related to all kinds of goods transportation fleets.

 

Developed companies were enhancing technology which they are tracking with Sim Based Tracking technology which can be used with various smart devices to check the vehicle in real-time anywhere with just internet connection.

 

Know More About Transportation Management System:

Transportation Management System plays an important role when it comes to the logistics program towards the whole supply chain that allows better stratification as well as synchronization factors. Also, this used to track the transport vehicle and trace easily all the products that you send.

 

Furtherly there will be effective leads of the management that will be run with orders as well as full of material flows. If you are done your work correctly then obtain successfully and get responsive results throughout the entire supply chain.

 

The advanced transition compared to traditional methods in this transportation is very demanding. This latest Transportation Management System is going to help in several ways. If you go back, in earlier days the transportation tasks were completed manually, but now works are going on completely with software and many other technological resources without any burden.

 

It is also helpful furtherly in the consolidation of dispatch and optimization, which helps in boosting their services to the customers and to have good relations between the organization team and customers. Like this, also they monitor every employee to be obtained. Therefore a company will be knowing and understanding about what’s going on through this transport operation.

Advantages Of Transportation Management System:

Increased Cost-Efficiency:

Everyone knows how the cost efficiency will be in the transport system. Yes, transportation is one of the prime costs that it is a feature of logistics. Well, to have a perfect transportation management system you need to plan well and it is better to use adequate resources which may be helpful for your company to have a better extent in decreasing the shipping costs. Business people need a transportation management system to analyze all kinds of financial factors of all the logistics consignment. This will help to get user-based suggestions in the process to decrease the price in particular things like driver overtime and fuel expenditure.

Data Management Will Be Simple:

It is important to plan for the distances as well as directions of the vehicle to have huge distribution coverage, moreover to reduce the cost for per unit transportation. It is important to have the information about this section to get to know the whole company team which plays an important role and needs to present all the data related to direction and lengths of the distance that vehicle goes.

 

And also where it is unloading and where the vehicle is uploading destinations need to know, and specific time the vehicle is reaching the destination that the company provides. Depends on the kind of good they need to carry the specific vehicle, which should be planned before based on the quantity and quality of the products and goods that they supply.

Hi-End Advanced Technology Makes Sure Transparency:

Including this Transport Management System, most of the companies were easily tracking the lifecycle of their everyday shipments and orders in real-time. Hence, they also get updates in real-time by tracking in monitors with the help of technology that projects on various devices.

 

In present days companies get real-time data that belongs to a specific consignment which helps to deliver the orders on time to the customers without any issues. In this method, companies are easily giving information to their customers regarding their shipment date along with time. It also allows people to have effective forecasts regarding the whole supply chain.

These are some of the benefits you have by opting for the Transportation Management System. They help you in many ways by tracking vehicles in real-time. We hope this information is helpful for you in future when you want to start a transportation business.