The new year is only about two months away and as we look at year-end reporting, it's natural to start thinking of ways to boost efficiency of your business during the months to come. Accounts payable is a department many decision makers will be looking at to improve financial performance. Inefficient or error-prone accounts payable processes can cause delays and impact company-wide performance indicators. Late fees, strained vendor relations and cancellations of vital services to your operations are just a few examples of the impact inefficient AP processing can have on a business. In this post we will see how to streamline your processes, but first let's list some of the main causes of AP inefficiency.
Common Causes of AP Inefficiency
- Sluggish and/or manual data entry
- Data entry errors
- Invoice exceptions
- Sluggish Approval Process
- Lost paper invoices
- Lack of storage
How to Increase AP Efficiency
Now that we've identified the pain points above, it's time to talk about fixing them. You probably already know this, but the first thing you want to do is track the above pain points as metrics (with the exception of maybe the last one). Of course total processing time and cost per invoice are always key metrics for AP departments, but considering our pain points, other important metrics include:
- Time spent on invoice data entry
- Number of errors per clerk per month
- Number of exceptions per clerk per month
- Time between approval submission and signature
- Number of lost invoices per month
Once you know where you are having the most difficulties, you will know where to focus your resources and time to improve the quickest.
If you are spotting inefficiencies across your process, it may mean your current AP automation solution isn't working for you anymore. If you haven't automated your payments department, you probably have trouble even tracking these metrics. What's worse, you might be burning money on manual processing. Automation will help you quickly address all of the above issues and boost these metrics. Learn More: Why Didn't I Automate Payments Sooner?
5 Ways to Boost AP Efficiency Quick
1. Rethink, simplify, troubleshoot workflows – This may seem obvious and there might not be a quick way to do it, but identifying bottlenecks with reliable data is the first step to faster processing, and fixing those bottle necks is the second.
2. ERP Integration - Is your AP software truly integrated to your accounting system? Find out why this is so important: Seamless ERP Integration is Essential
3. Electronic Payments – Paying vendors right out of your AP solution, this is a must. If you aren't paying every vendor who accepts electronic payments this way, you are at greater risk for fraud, errors and inefficiency.
4. Multi-Entity AP – Multi-location accounts payables management can be very costly when managed inefficiently. When managed really well, it can be cost effective and data coming from multiple locations will deliver value to the business. Learn More
5. Data Capture – If you are finding a lot of errors and exceptions, it may be a problem with your optical character recognition (OCR) provider. If you don't have OCR in your AP department it's time to digitize.
At Fidesic, service is our top priority which makes our Net Promoter Score (NPS) our key metric. We launched an NPS program several months ago and our current NPS places our service rating above 70% of other software vendors, but we're not done. We're working to keep our customers happy and we have seen insights on what segments of our products people love and what we can improve. We believe we can make next year our best yet.
If your are a Dynamics GP or QuickBooks user, let us know how we can help you boost your accounts payable processing efficiency in the new year.
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