Looking after your business requires multiple systems working for different branches such as accounts, tax and marketing. Business finances are further broken down into accounts receivable and accounts payable (AP). While it is easy to overlook, having the right systems for your AP can make a big difference to how your company performs.

What are accounts payable?

Your accounts payable department looks after all your supplier bills and invoices by checking and paying for the goods and services you purchased to make your company function.

What are the key functions of accounts payable?

There is more to accounts payable than just paying invoices. A well-run AP system assists with good financial management, relationships with suppliers and your company's reputation.

This is achieved through some key functions such as:

• Invoice verification - to ensure it is the same as the good received

• Invoice reception and categorisation - different departments and spending will be allocated to different categories

• Data capture and coding - all invoice information is captured for future reference and paper trails - this can be a digital process

• Routing - requesting authorisation or payment from the right staff member or stakeholder

Each of the key functions needs to be recorded consistently and accurately, which can be difficult with manual entries. A bookkeeper can handle your accounts payable and free up your time.

What is the accounts payable process?

Having efficient accounts payable processes in place helps maintain a strong and healthy supply chain. Most AP process involves the following steps:

Invoice capture

The data from the invoice is stored on an internal system that allows for easy viewing and retrieval of items by supplier, category, line item and by cost.

Invoice approval

All invoices lodged need to be approved or checked against a prior approval form to ensure they were requested and required by an authorised person within the company.

Payment authorisation

For security and accountability, only certain members of staff can authorise payments. This is to reduce errors and to ensure fraudulent payments are not conducted.

Payment execution

A payment time, amount and type are arranged to see the invoice completed.

Accounts payable optimisation

Your accounts payable should also be looking for ways to optimise systems and functions to get better results and more accuracy through technologies and software platforms.

What does an accounts payable officer do?

Most businesses will have a dedicated accounts payable officer or team of staff looking to manage the administration, financial aspects and reporting of AP. Duties include:

• Working with complex software

• Checking invoice accuracy

• Contacting suppliers to correct issues

• Timely payments

• Coding invoices correctly

• Matching invoices with purchase orders

• Processing invoice payments

• Reconciliations

• Monthly reporting

What are the challenges of managing accounts payable?

Traditional methods of recording and paying invoices lead to some lingering challenges for managing accounts payable staff going forward. Of these challenges the greatest ones are:

• Removing paper and manual effort

• Enhancing security and fighting fraud

• Improving the efficiency of data management

• Paying vendors on time

• Bolstering the value of accounts payable

These challenges can be overcome using automated AP processes that can significantly reduce errors, minimise the number of staff hours needed and increase efficiency. As well as freeing up time for staff to focus on other duties, automation also helps improve supply chain relationships through timely payments and inaccuracy resolutions.

Your accounts payable team are responsible for managing your entire accounts payable process, including coding, reconciliations, approvals and payments. Giving them the support they need to complete their job with ease bodes well for your company brand and continued professional relationships.