The accounts department of every organization has a big responsibility on its shoulders. They not only have to account for the revenue generated by the company but also keep track of the liabilities that are getting added to the company’s record. Every company, whatever industry it may be in, has to pay its bills and timely payments are key to building trust amongst vendors and partners. Therefore, the accounts payable of the company has to be managed very effectively, and the payment should always be on time.
So, in this article, let us take a look at the accounts payable best practices for 2022 so that businesses can take a cue from these strategies and implement them to optimize their own accounts handling.
Table of Contents
Accounts Payable Best Practices For 2023
● Optimize Accounts Payable Workflow
Since the first step in the accounts payable workflow is to gather data from all relevant sources, you need to optimize this process first. To do so, you need to create a central repository where all internal records are stored periodically and can be visualized altogether whenever tallying has to be performed. Similarly, a separate central record portal can be created for the records that are submitted by vendors or those taken from the bank, which ultimately has to be compared with your own internal records.
● Deal With Invoices On Priority Basis
Optimization of accounts payable workflow cannot happen till the invoices are prioritized in a strategic manner. One way to prioritize the invoices can be based on due dates. Those invoices that have a very proximal due date should be prioritized, and everything from cross-checking to contacting the vendor and generation of payment should be done on a priority basis for that particular invoice only.
This way, companies can ensure that there are no shortcomings in the accounts payable process and that all invoices are managed sequentially, leaving behind no liabilities or debt on the company’s name.
● Use Advanced Applications and Tools
Primarily, the handling of data makes accounts payable management extremely tedious and cumbersome. Therefore companies should make use of advanced tools, like an Artificial Intelligence-based Optical Character Recognition application as part of the accounts payable best practices.
By using OCR software, companies can seek data from even physical documents submitted by vendors and convert them to a digitally usable form. This converted text can easily be updated on the company’s portal, making data gathering and processing much easier. Further, artificial intelligence ensures that the chances of errors are minimized and that the workflow gets optimized at each step.
● Bringing Vendors On-board
The other important part of the accounts payable process is the vendor himself. You need to take him into confidence and build a smooth process for payment settlement. Arrangements like the settlement of invoices at a fixed period of 30, 60, or 90 days can be a good way to start. Further, enhancing communication with vendors also helps you inform them timely about a late payment or any other glitch in the accounts payable workflow. This way, the company’s reputation does not take a blow, and the management of invoices, debt, liabilities, etc., becomes much easier.
● Do Away With Physical Documentation
Handling, storing, and processing physical documents is a big headache in itself. Cross-checking physical documents makes the accounts payable workflow very difficult to manage and also requires a larger workforce to do the same.
Therefore, companies should only contact their vendors and the bank to seek invoices, account statements, etc., in a digital format. Having data in a digitized form makes it easier for companies to upload it on their own portals and then match the details with their internal records before processing the right payment amount. It is a very important part of the AP best practices.
● Give Attention to Payment Reconciliation
Payment reconciliation is the process where companies match and compare their internal records with the external records submitted by banks, sellers, clients, customers, etc. Since this cross-checking has to be performed before the payments for any vendor can be released, companies should cultivate a culture where payment reconciliation is done periodically.
Many organizations perform payment reconciliation on a daily basis, where at the end of the day, the accounts section has to submit reports about such comparisons. Companies that delay payment reconciliation usually face issues like cash flow obstruction, and their poor bookkeeping records come across as an embarrassment. So, reconciliation of data regularly is part of accounts payable internal controls best practices too.
KlearStack OCR For Digitizing Accounts Payable
By leveraging the advancement of artificial intelligence, KlearStack has come up with the best possible solution for optimizing accounts payable workflow. A software that helps in the extraction of required data within seconds from documents of any format or template whatsoever, the KlearStack OCR helps account managers get hold of the right data without putting in much effort. A software that helps businesses save big on time, money, and effort, the KlearStack OCR has become a hot favorite among the accounts departments of companies across industries.
Contact KlearStack representatives today to book a demo for the AI-based OCR software.