Every month it's the same old thing. The invoices pile up, and even though you want to ignore them, you know at some point you're going to have to face them. There are no magic payment solutions.
You open all the envelopes.
You cross check them to make sure they're accurate and you're being billed for stuff you've actually received.
You field phone calls from that vendor you forgot to pay last month. You write out checks, discover you're out of stamps, lick some envelopes, and finally—at long last—you've handled all your accounts payable.
Except you've already started accumulating new invoices! It never ends!
If you're a small-business owner, you may have to handle the drudgery of AP yourself. Medium-sized businesses may get to pass that work off to someone else. But there are still too many hours of labor being spent on spending money. There has to be a better way.
If you're looking for payment solutions, you have three basic options.
Your first payment solution is by far the most expensive, but it's also the one that can help take all the work off your plate.
● receive invoices (either by good old-fashioned snail mail or electronically),
● scan them,
● get approval,
● code the expenses and
● make the payment.
This leaves you with organized records and sophisticated data analytics, often stored in the cloud for easy access anytime you need it. (That means less envelope licking.)
Outsourcing your AP may be a luxury every company can't afford, but when you weigh the cost against the hours you and your staff spend on the task, it may seem like one of the more reasonable payment solutions.
While outsourcing your AP might be out of reach for now, there's a great second option. There's a slew of software payment solutions that help make managing AP simpler and more efficient through automation.
A solid automated AP solution solves a host of problems. As you move to electronic invoicing:
● you don't have to worry about losing paper invoices.
● you'll be able to speed up authorization.
● you can practically stop writing or signing checks.
● you'll have easy-to-access, organized records.
● you'll be able to pay bills or deal with AP issues from anywhere in the world when your records are stored in the cloud.
Added bonuses? Your bookkeeper and accountant may just love you forever for making their jobs so much simpler, and you may never have to search for stamps again. (Except for those holiday cards!)
One of the best ways to run your business more efficiently is to automate those processes that make sense. Automating AP? That's a simple, effective payment solution.
3. Updated Old-Fashioned
Maybe you're just starting your company, and you don't necessarily need or want to farm out or automate your AP. Is there anything you can do to streamline the process?
Of course there is!
Outsourcing your AP may be a luxury every company can't afford, but when you weigh the cost against the hours you and your staff spend on the task, it may seem like a more reasonable payment solution.
Part of my Profit First process (a process that can help turn companies from cash-eating monsters into money-making machines) is handling your AP. The method is simple:
You pay your bills twice a month, typically on the 10th and 25th of every month.
Why twice a month? I have a couple of reasons.
First, if you let everything pile up and pay bills once a month, it's a big job. You'll dread it, you'll put it off and it will seem even worse than it really is.
When you split your bills up, the job is much more palatable. I've coached entrepreneurs who spend 15 minutes two times a month on this process, and all their bills are paid. Bite-sized chores are much more pleasant than having to stare down a mountain of bills.
Second, when you get into your 10th and 25th rhythm, you'll find it much easier to keep control of your expenses. Since you have fewer bills to pay when you split them up, you'll be more attuned to unexpected increases and more apt to notice trends in your spending.
Controlling expenses is a good thing, and it's easier to do if you're not facing an entire month's AP. It is a mindset shift that will take dedication, but once you get in the rhythm, it becomes the most vital of your payment solutions.
We all like getting checks more than we do writing them, but AP is part of everyone's business—and it doesn't have to be the chore that hangs over your head.
Read more articles on accounts receivable/payable.
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