10 Top Tips On Cutting Costs And Improving Efficiency In Your Ap Department Part One

Accounts Payable (AP) is a very busy department which will process thousands of invoices every year

. Processing invoices manually is very labour intensive and expensive job with an average cost of 12 per invoice, which can add up to a lot of money over a year. With the New Year just around the corner, we thought we would give you our top 10 tips on how to cut costs and improve efficiency within your AP department. Here are the first 5 top tips, make sure you come back next week to read the last 5.

1. Offer Supplier Discounts

It is critical that businesses maintain a good relationship with their suppliers, and one of the best ways of maintaining a good relationship is to pay invoices on time. Offering a supplier discount could help to strengthen this relationship even more, as it will give the supplier incentive to pay earlier.

2. Look out for Duplicate Payments

Duplicate payments are becoming one of the main offenders in costing businesses money. Some duplicate payments can be a genuine mistake, but some aren"t. In order to fully address this issue, human intervention from both the customer and supplier is required. An invoice processing system could help to spot duplicate invoices by flagging up any discrepancies within the system, allowing the AP team to follow up as soon as possible.

3. Optical Character Recognition (OCR) is Your Friend

OCR technology is able to convert scanned images of printed or handwritten text into a form that can be recognised and easily processed. OCR is able to identify incoming document types, such as invoices, and immediately extract information such as purchase order number, invoice date, line item data and much more. Having OCR as part of your wider Invoice Management Solution can help to reduce data entry costs as well as reducing the amount of errors usually seen when inputting data manually into the finance system.

4. Stay on Top of Late Payments

Late payments are becoming one of the biggest problems for businesses, with nearly 124,100 organisations being put out of business because of it. Make sure your company keeps track of any late payments and chases suppliers promptly. An e-invoicing system could help you to retrieve the money your owed more quickly, due to being able to send invoices directly to your suppliers in-box, which minimises time delays and dangers of documents being "lost" in the post.

5. Communication is Key

Being able to communicate effectively is key to any business, and this is no different for the AP department. When suppliers contact AP with queries it is imperative that the query is solved in a timely manner. Implementing an Invoice Management Solution (IMS) can help to you to communicate effectively with your suppliers, because the invoice and any accompanying information can be instantly retrieved from within the system. This will help to save time and money on having to call the supplier back. A supplier portal can also be used so suppliers can access their own invoices online without having to contact the AP team.

Stay tuned for next week where you can find out points 6-10.

by: Documation

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