Accounts payable is the sum of all of the short-term obligations businesses are required to pay their service providers. These include the various products purchased and the services acquired by the suppliers on credit.

Since the aim of businesses is mainly to build a competitive edge in their particular industry, accounts payable is often side-glanced, with little effort put in devising a cost-effective strategy for it. Companies tend to stick to conventional and old-school methods of managing their accounts payable, which can lead to huge losses in the long run.

In fact, according to a study published by the Aberdeen Group, businesses that have their accounts payable automated can save nearly 80% on invoice expenses alone.

Here are a few practices you should adopt for cost-effective accounts payable management.

Limit the Number of Invoices

Take a good look at your invoice stream to determine how much you need to cut down by. Are there multiple, low dollar payments you made to certain service providers on just a handful of occasions? Did your company spend on employee travel this month and the expenses it led to? Did you draft separate invoices for every single event that took place?

In order to cut down on your invoices, you need to adopt a policy of using a commercial credit card for these purchases. This will save you the time that’s otherwise spent on dealing with individual checks, and will also limit the number of redundant invoices and their costs.

Adopt an Electronic Payment System

Let’s face it—if you still haven’t switched to electronic payment, you’re slowing down your progress yourself. In the digitized era where virtual accounts are the most effective way of doing transactions, using manual checks is a far more costly affair.

ACH transactions are almost ten times more cost-effective than sending checks, and unlike the latter, do not waste company funds.

Opt For Centralized AP Processing and Reporting

A lot of businesses conduct their operations from multiple locations, and thus have to make payment arrangements for the vendors, suppliers, and other service providers in these areas. This can cause a duplication of the accounting labor involved in the process as well as the functions performed at various locations. However, if this activity was to be centralized, the company can save both time and money and increase its productivity and efficiency.

In a centralized account payable system, all of the accounting functions of the company are handled by one staffing group. All of the invoices, receipts, trade credit approvals, and purchase order compilation are processed by a single team of accountants, which reduces enterprise costs and resources.

Have our professional bookkeeping services handle your company’s accounts payable and save money through our strategic methods!

Get in touch with our team in Boca Raton, Florida to learn more about our accounting services.

We also specialize in managing financial statements, payroll services, and issuing verified invoices to customers.