Written by Liquid
Businesses work hard to keep track of their finances, looking to track their spending and payments. It is an essential part of running a successful business. There are many tools out there to make the job easier, though whether you are a small business owner, self-employed, or the manager of an international company, knowledge is key.
Keeping up with your finances can become complicated when working with many freelancers, other businesses, suppliers, and more. With payments coming in nonstop, there are plenty of invoices to keep track of.
It is a seemingly never-ending process. Liquid provides fantastic tools for helping you increase your reliability and awareness, and fine-tune your business practices to apply to your finances.
Paying attention can help your business stay in profit for the immediate future while also helping you determine your long-term needs. Putting good methods in place can help with financial forecasting while ensuring that vendors, suppliers, freelancers, and other types of employees receive their payments on time. Plus, your Accounts Payable process can help your finance team manage these things while your company builds a reputation for timely payments.
What is an Accounts Payable Process?
Within a finance department, a company may have an Accounts Payable team. Sometimes, however, an individual is in charge of taking care of the Accounts Payable process. This person, or team, monitors your company’s payments to external suppliers, vendors, and more. This includes freelancers. Making sure all of these people are getting paid on time and accurately can greatly increase goodwill with your company.
Through the use of applications, software, and other means, including the relevant invoices, as well as the deadlines for paying them, into a system, is important. While Accounts Payable can be done manually, having a system in place like Liquid to help with the process can save immense amounts of time and money.
Mapping important points that your finance teams need to be aware of is an important part of what Accounts Payable processes do, too. When services or materials have been delivered, the data is input into the system. Also, systems keep track of when invoices are submitted, when the deadlines for making payments are, and in which step of the process pending payments are in.
All this information can make it easier to deliver payments on time and also helps keep companies within their budget. An opposite process, called Accounts Receivable, tracks what payments are owed to your business for your company’s services and products. Both of these help companies keep track of the money coming in and the money going out.
What are Workflows?
There are two workflows the processes involved in accounts payable can be split into. These are upstream and downstream. Upstream refers to the stages leading up to your business buying services and products. This can include sourcing vendors, contacting them, establishing rates, figuring out delivery, and creating contracts for partnerships. By tracking these processes, a company can list all vendors, rates, and services/products.
Downstream processes are those that take place after the purchase of services and products from a supplier. This information mostly involves receiving products and services, dealing with invoices, and delivering payments as needed. Many of these processes are most familiar to a finance department, though sole proprietors and other business owners are also often familiar.
Ensuring products and services are paid for promptly, suppliers are notified of any issues, and invoices are organized well is an essential part of any business. Improving your payout process and ensuring that suppliers are paid efficiently keeps you in good standing.
What are the Benefits of Accounts Payable?
Managing finances can get quite confusing when numerous suppliers and vendors are involved. Having efficient systems in place is a top priority. The processes companies are looking for are designed to simplify the systems involved. Making it easier for CEOs, finance teams, and other professionals to keep track of payment information for their suppliers, product inventory, and other customer and professional profiles, the systems a company uses can impact how they perform long term.
Using Accounts Payable has many advantages, including minimizing errors, reducing paper use, helping track equipment and resources, and helping provide timely payments to suppliers. If using automated systems, a variety of features on your Accounts Payable platform can speed up the process, minimize errors, and help your finance team be more efficient.
By labeling the invoices as paid, products as received, and with methods in place to avoid duplicates, confusion can be limited. In addition, software can often be programmed to highlight issues. This can include things like limited inventory, limited funds, and putting review processes in place so multiple people in your business can approve payments before they go out.
Efficiency And Security
In addition, manually handling payments and invoices can involve quite a bit more of your team's time. Rather than keeping records in filing cabinets and boxes, technology allows people to use spreadsheets on their electronic devices. Moving to digital copies and online services makes it easy to share and send files, helping people save time and restricting access to sensitive documents to only those who need access.
Businesses have many moving parts, and payments need to be received and made quite often. When dealing with multiple vendors, freelancers, and suppliers simultaneously, having digital records makes it easier to see the big picture all at once. In addition to financial benefits such as helping companies avoid incurring late fees or losing business due to unreliable payments, your financial team can more easily discover potential discrepancies, avoid missing payments, and more.
Establishing Your Own Routine
Establishing your own Accounts Payable routine is essential. There are four main stages of Accounts Payable, which provide a good starting point. The first is charting accounts and vendors. Next is to receive and review bills. Following that, payments will need to be approved. Lastly, coming up with efficient ways to keep on top of the cyclical process of Accounts Payable is essential. Liquid is designed to help you through this process, making your routine easier, more efficient, and more effective.
By collecting the information you need in one place, Accounts Payable reduces missed deadlines, which increases the reliability of your company. Set up Accounts Payable today, using the tools here to satisfy your business needs. With new information alerts, updates, and an array of automated features to help notify you and your finance team of the information you need, Liquid lets you promptly pay your vendors in a centralized location. Grow your business, save time, and save money with an effective and reliable accounts payable process.