Generally, practices that produce most favorable business results as compared to first-class industry leaders are said to be the best practices. These best practices help in improving and accomplishing positive results. Therefore, the practices of a company in controlling its accounts payable processing influences the companys cash flow and supplier relationships . These are considered to be the two important issues responsible for the growth of the company.
Naturally, every company strives to apply Accounts payable best practices in controlling accounts payable with the intention of contributing positively to cash flow and bearing jointly beneficial relationships with suppliers. The hope between a company and its suppliers seems to be shaken by accounts payable actions there by upsetting supplier relations. On the other hand, paying your bills on time improves your relationship with the supplier. An improved relationship with suppliers is essential to a company since they supply priceless trade credit, and also offer ideas for new methods and products, which are considered as important role in customer service. Best Practices Execution: The execution of best practices in account payable enables a company to control its accounts payable activities with the following advantages. The advantages include the,
(1) Recompense of bill on a fixed schedule of the company\'s choosing,
(2) Guarantee the correctness and genuineness of statements that the company pays, and
(3) Enables to carry the process involving less paperwork and at minimum expense. Todays modern accounts payable operations have stipulated and simplified their procedures.
A number of new and advanced technologies have stepped in, and thus facilitating the computerization in almost every accounts payable transaction. The new technologies include the electronic invoice presentment payment (EIPP) and electronic funds transfer (EFT). As a matter of fact, organization have acknowledged the importance of accounts payable professionals and their important role in achieving financial goals by shifting focus from transaction-oriented processes to value-adding activities. In recent years, most of the high-flying companies have started using advanced technology making payments. Some of such are the EFT tools, computer-assisted audit techniques (CAAT) and antifraud measures to check and prevent illicit accounts payable transactions. Some other companies do seek to rationalize or eliminate steps in accounts payable transactions, such as invoice processing. In spite of all this advanced mechanization, companies still strive hard in maintaining good relationship among the various faculties. Further, companies also focus and make progressive steps towards supplier communications, payment timing, and fraud prevention. In addition, steps are taken towards controlling organizational initiatives, like regulatory compliance and internal control efforts.
Some Best Practices: Following are some best practices found useful in managing your Accounts Payables.
1. Manage payment timing and terms to maximize cash flow . Every company would like to manage their accounts payable process in order o maintain their cash flow objectives. By this they plane to accomplish unbiased or constructive cash flow with the assurance of their cash being paid out at a rate equal to or slower than the rate at which cash is collected. Their objectives are achieved by negotiations that first subdivide the dealer base according to some factors such as dollars spent, transactional volume, and risk of disruption to the supply chain. However, the subdivision points out which dealer might present constructive opportunities to confer new terms and conditions that might help in posing deplorable risks. All these efforts on the part of the dealers help finance managers to work with purchasing or strategic sourcing departments to plan the pitch requirements for more positive payment terms to the appropriate suppliers.
2. Automate or eliminate steps in invoice processing. It is a fact that many a number of accounts payable best practices professionals are burdened with an increasing number of statements with constantly abridged income. Moreover, these high flying companies power up the existing technologies, such as optical character recognition (OCR) and work-flow systems, in order to digitize statement documents. In a way this helps to lessen errors connected with manual statement processing and increase processing efficiency.
3. Maintain an open line of communication with suppliers . Even though the automation of accounts payable has caused lots of advantages, the process still remains to be a relationship-based business. Therefore, maintaining an open line of communication with suppliers helps many leading companies along this line. These companies evaluate their dealer base regularly, centering on the import of the purchase and the supply risk. Accordingly, they segregate dealers into different service categories that help strategic discussions in developing relationships according to the risk and value criteria of the companies. These categories are non-critical, leverage, bottleneck, and strategic commodities.
4. Boost fraud prevention and detection measures. Accounts payable processing is being affected by the fraudulent activities that have emerged in the recent years. These activities have seen an increase in recent years, due to the increase in the number of criminals who learn to penetrate Accounts payable best practices systems and make illegal transactions. Therefore, there arises a need for the companies to protect themselves against these increasing fraud techniques from unauthorized use of p-cards to illegal electronic fund transfers. Also, these activities lead the company in to misstate liabilities in their financial reports
Naturally, every company strives to apply Accounts payable best practices in controlling accounts payable with the intention of contributing positively to cash flow and bearing jointly beneficial relationships with suppliers. The hope between a company and its suppliers seems to be shaken by accounts payable actions there by upsetting supplier relations. On the other hand, paying your bills on time improves your relationship with the supplier. An improved relationship with suppliers is essential to a company since they supply priceless trade credit, and also offer ideas for new methods and products, which are considered as important role in customer service. Best Practices Execution: The execution of best practices in account payable enables a company to control its accounts payable activities with the following advantages. The advantages include the,
(1) Recompense of bill on a fixed schedule of the company\'s choosing,
(2) Guarantee the correctness and genuineness of statements that the company pays, and
(3) Enables to carry the process involving less paperwork and at minimum expense. Todays modern accounts payable operations have stipulated and simplified their procedures.
A number of new and advanced technologies have stepped in, and thus facilitating the computerization in almost every accounts payable transaction. The new technologies include the electronic invoice presentment payment (EIPP) and electronic funds transfer (EFT). As a matter of fact, organization have acknowledged the importance of accounts payable professionals and their important role in achieving financial goals by shifting focus from transaction-oriented processes to value-adding activities. In recent years, most of the high-flying companies have started using advanced technology making payments. Some of such are the EFT tools, computer-assisted audit techniques (CAAT) and antifraud measures to check and prevent illicit accounts payable transactions. Some other companies do seek to rationalize or eliminate steps in accounts payable transactions, such as invoice processing. In spite of all this advanced mechanization, companies still strive hard in maintaining good relationship among the various faculties. Further, companies also focus and make progressive steps towards supplier communications, payment timing, and fraud prevention. In addition, steps are taken towards controlling organizational initiatives, like regulatory compliance and internal control efforts.
Some Best Practices: Following are some best practices found useful in managing your Accounts Payables.
1. Manage payment timing and terms to maximize cash flow . Every company would like to manage their accounts payable process in order o maintain their cash flow objectives. By this they plane to accomplish unbiased or constructive cash flow with the assurance of their cash being paid out at a rate equal to or slower than the rate at which cash is collected. Their objectives are achieved by negotiations that first subdivide the dealer base according to some factors such as dollars spent, transactional volume, and risk of disruption to the supply chain. However, the subdivision points out which dealer might present constructive opportunities to confer new terms and conditions that might help in posing deplorable risks. All these efforts on the part of the dealers help finance managers to work with purchasing or strategic sourcing departments to plan the pitch requirements for more positive payment terms to the appropriate suppliers.
2. Automate or eliminate steps in invoice processing. It is a fact that many a number of accounts payable best practices professionals are burdened with an increasing number of statements with constantly abridged income. Moreover, these high flying companies power up the existing technologies, such as optical character recognition (OCR) and work-flow systems, in order to digitize statement documents. In a way this helps to lessen errors connected with manual statement processing and increase processing efficiency.
3. Maintain an open line of communication with suppliers . Even though the automation of accounts payable has caused lots of advantages, the process still remains to be a relationship-based business. Therefore, maintaining an open line of communication with suppliers helps many leading companies along this line. These companies evaluate their dealer base regularly, centering on the import of the purchase and the supply risk. Accordingly, they segregate dealers into different service categories that help strategic discussions in developing relationships according to the risk and value criteria of the companies. These categories are non-critical, leverage, bottleneck, and strategic commodities.
4. Boost fraud prevention and detection measures. Accounts payable processing is being affected by the fraudulent activities that have emerged in the recent years. These activities have seen an increase in recent years, due to the increase in the number of criminals who learn to penetrate Accounts payable best practices systems and make illegal transactions. Therefore, there arises a need for the companies to protect themselves against these increasing fraud techniques from unauthorized use of p-cards to illegal electronic fund transfers. Also, these activities lead the company in to misstate liabilities in their financial reports
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