How to Simplify Your Business Bills Process
Small business owners have a prejudice when it comes to accounting. Invoicing gets the bulk share of their attention, and understandably so, since revenues are the lifeline of a business. Paying bills, on the other hand, tend to be faced with less eagerness and can sometimes get bumped down to the bottom of a to-do list as a result. Still, while paying bills and invoices may be unpleasant, it’s an essential part of doing business.
Learning how to simplify your accounts payable processes can make things feel more manageable and help to ensure that you don’t make costly mistakes along the way. The evasion mindset that so many small business owners take with paying bills can lead to missed payments, late fees, and lost contracts. The list of best practices that we’ve provided below can help you avoid any missteps and keep your payment history in good standing.
1. Establish procedure for bill paying.
Paying bills and invoices as soon as they come in is an ideal, not a system. While it may seem great in theory, implementing immediate payments on accounts payables can sometimes create more problems than it solves. For example, a system based on immediate invoice payments will mean that your accounting department will require full-time staffing. On the other hand, an accounts payable system that follows a weekly or monthly cadence for paying bills can be run by more cost-effective, part-time teams—or even specialized software.
Small business bill management doesn’t need to be complicated. Create a process where payables are directed to a single point of accountability and payments are issued only on specific days, like the 15th and the 30th of the month, or only every Friday. This needs to be consistent across the board, regardless of the size of the company or number of departments involved.
2. Eliminate excessive steps in the bill paying process.
Complexity can be a deterrent to profitability. This is often seen when accounts payable processes are upgraded. The duplicate and sometimes triplicate approaches used by the accountants of the olden days are excessive in a modern age when technology does much of that work for you. Look for steps in your existing accounts payable process that can be eliminated.
One area where these redundancies can be especially tedious is matching all previous records to the invoice for any discrepancies. The first step in general accounts payable procedures is to do a three-way match between purchase order, goods receipt, and invoice. How many steps are required to do that in your company? Upgrading your software and consolidating some of those efforts can streamline the process for you.
3. Implement automation.
On a similar note, it’s important to understand how each of these best practices can be enhanced with automation. For example, your business checking account might offer a bills inbox to keep your business bills organized, set up automated approval of supplier invoices, create a red flag system for unusual activity, and schedule payments to go out on specific dates. Software integrations, such as integrating QuickBooks connection with your business bank, can also make it easier to import and streamline your accounting processes. Automation can make your company more efficient and cut down on manpower costs.
The most difficult part of adding new technology to your existing system is not typically the installation and training, but rather the lack of a open mindset and willingness to rely on automation for key processes. Many business owners prefer to have more control over cash outflows, but this mindset can hinder efficiency and create unnecessary bottlenecks that impede growth. Automation is a tool, just like any other technology you implement to make your life easier as a business owner, and it can go a long way when it comes to accounts payable.
4. Identify for payment patterns.
There’s a relationship behind every bill or invoice that your business pays each month. Look for spending patterns that can help with building and maintaining those relationships. There may be discounts available if the volume is high, and tracking prices could reveal a need for negotiating more competitive pricing or exploring relationships with new suppliers.
Spending patterns can also be used to create metrics for tracking cash inflows and outflows. Taking careful stock of money going out of the business through a more thoughtful approach to accounts payable is a great way to learn more about your business and be more on top of the repeat activity or expectations that might inform business decisions throughout the year.
One of the most important things that a small business owner can learn throughout their journey is that they don’t have to do everything themselves. Small business owners who see bill management as a necessary evil might see better results if they outsource their accounts payable, whether it’s to someone within the company or an external firm like Tax-Keeping By AC. That eliminates personal attachment and makes this more of a business process. It also frees up your time as a business owner so that you can focus more of your attention on business growth opportunities.
Accounts payable is a function of your company, and there are systems and processes that can streamline your accounts payable processes to make the function work more efficiently. The best practices to do that are setting up a payment schedule, eliminating unnecessary steps, automating what you can, identifying spending behaviors, and outsource the rest to an expert, want to discuss your business needs? Let’s talk.