As businesses proceed on their journey to post COVID-19 recovery, collective cooperation is key. For most small businesses, it means building a closer relationship with suppliers. It’s very important that your preferred suppliers get all the support they need as they are also rebuilding after COVID-19. Maintain strong and well-managed cash flow and pay keen attention to your accounts payable.
Why is account payable automation important?
According to research, 28 percent of small businesses report that 60 percent of their invoices are not paid on time. This adversely affects the cash flow of suppliers highlighting the importance of making prompt payments. Prompt payment can establish a good relationship with your suppliers.
Most small and medium-sized businesses manage their accounts payables through spreadsheets and other paper-based tools. Others pay their invoices promptly without authenticating whether the amount quoted is accurate or not.
Here are some of the bottlenecks in operating manual accounts payables:
- Losing sight of overall business expenditure and the person who authorized it.
- Susceptibility to paying false invoice scams
- A loss in time and productivity due to burdensome manual processes
- Exposure to the risks of late payments, double payments, lost payments and goods yet to received.
- Failure to improve and strengthen supplier relations
Managing accounts payable takes a longer time than most people expect. This only increases the business exposure to errors; which are costly in the long run.
Benefits of automating your Accounts payable
During this recovery period, anything that promotes, efficiency, cost reduction, and smooth operation should be adopted immediately. You also enjoy the ripple effect of improved supplier relations and an analytical view of your expenditure.
Research reveals that most businesses running on account payable/account invoicing systems have reduced their invoice processing costs by a factor of 5. They also process their invoices 2.5 times faster than manually operating businesses.
What are the benefits of adopting e-payables?
- Reduced chances of making costly errors and reducing processing costs, which is the whole point of the upgrade.
- Increased ability to detect fraud or scammy invoices. It also adds visibility to your invoices and gives you instant feedback on payment data
- Take full advantage of the discounts offered (avoiding late-payments)
- Reduced need for staff members to handle administrative work linked to accounts payable
- Get insights on your spending patterns which helps you make sound decisions on which businesses to continue or discontinue engagement
The power of getting along
If you enjoy strong relationships with suppliers, here is how you can benefit:
- Preferential treatment when supplying goods to your business whether there is a shortage or not
- Preferential pricing (lower than the competition) as you are a low-risk customer
- Discounts as a result of making early payments.
- Improved payment terms (more flexible due to built trust)
Where there is collaboration, it creates a conducive atmosphere for negotiation. Should there be a scenario where you cannot pay on time, the supplier will give you more leeway than others who have a history of defaults.
The broader picture for the economy at large
No business runs in a vacuum, thus the desire to see the overall economy run smoothly and efficiently. If your business plays it’s a role in remitting payments on time, it contributes to a smooth performing economy, promoting the overall economic recovery.
Invoice Crowd offers e-invoicing and automated accounting for small businesses.