14 May 2020

6 Ways to Manage Your Cash Flow with Accounts Payable Automation

Accounts payable is that part of finance that deals with the payment aspect, which means it has a deep impact on your cash flow. In these tough times, where the whole world is battling with a pandemic of the kind never experienced before, it is crucial to manage all aspects of your business with care.

At To-Increase, we have customers who have asked us what they can do to manage their business better. There are many solutions available that can help you streamline your business better by establishing connectivity, ensuring security and compliance, managing master data, business process management, and more. One of the steps that we ask our customers to take is to manage their cash flow better.

How does Accounts Payable Automation help you manage cash flow?

Businesses manage their cash flow through four aspects:

  • Speeding up the collection of payments from customers
  • Getting new orders with the potential for payment
  • Negotiating the best possible payment terms from suppliers and vendors
  • Reducing the number of unplanned expenses
  • Streamline payments to ensure that cash outflow is regulated evenly

While accounts payable automation will not help you directly with the first two aspects, it can have a positive and significant impact on the last three.

Increase cashflow AP Automation

Let us have a look at how accounts payable automation can help you with these three aspects:

Negotiating the best possible payment terms from suppliers and vendors

When you automate your accounts payable processes, it aids in reducing your invoice processing time. With a mostly paperless process that does two or three-level matching automatically, quicker approval with mobile invoice management, the payment is processed on time.

When you make payments on time, you become eligible for early payment discounts, which has a positive impact on your cash flow. What is more, you will also be able to negotiate better payment terms from vendors and suppliers when your company consistently makes payments on time.

Reducing the number of unplanned expenses

With accounts payable automation, another aspect that helps manage your cash flow better is controlling unplanned spending. With an e-procurement module in place, you can streamline both purchase order-linked purchases as well as other expenditures.

Ensuring that all purchases are assessed in terms of priority, negotiating rates, and restricting non-necessary expenses is another way that accounts payable automation helps manage the cash flow better.

Streamline payments to ensure that cash outflow is regulated evenly  

One of the main issues that companies face is that of several payments coming up for disbursement at the same time, which throws the working capital and cash flow management off-kilter.

When you dive deeper into the root cause of this occurrence, more often than not, accounts payable is the culprit, with slow processing of invoices. With AP automation, you would be able to process invoices on-time, ensuring that the payments are streamlined, and cash flow requirements are manageable.

Other ways in which accounts payable automation helps

When you think of it, accounts payable can also help you with the first two aspects mentioned above in an indirect way. Prompt payments from customers and new orders are dependent on your company’s ability to deliver quality products on time. Accounts payable helps you in this by sourcing quality supplies at attractive prices.

How you can use AP automation to manage cash flow

In these tough times, it is vital to ensure that your business works on a sustainable model and one of the aspects to ensure this is by streamlining your accounts payable processes. Here are some of the next steps you should consider:

  • Assess how you are processing your invoices and the time taken to make payments
  • The number of people involved in the accounts payable process
  • Look at instances of late payment charges, double payments, and missed payments
  • Talk to all the stakeholders involved (accounts payable team, finance, procurement, production, audit, IT, and others)
  • Make a list of what you require in an accounts payable automation solution
  • Talk to accounts payable automation solution providers
  • Assess sync with ERP and ask for a demo
  • Look at testimonials and make a business case to your top management

Learn how our AP automation solutions can help streamline and manage your cashflow

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Daniel Villegas,
Daniel Villegas,
Domain Sales Specialist

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