The process of making payments on time and in line with service level agreements is a high priority in Accounts Payable.
However, all too often, it can be seen as a major issue – with many organisations claiming making swift payments is one of the top three challenges facing the industry.
Late payment penalties can cripple a business financially. A recent survey by BACS (Bankers’ Automated Clearing Services) revealed that the average UK SME is now owed £39,000 at any one time – and that businesses are owed around 10% more than last year.
Critically, those hit by late payment are waiting an average of 28 days above their payment terms to have invoices settled – this is a less than ideal situation and can generate an air of mistrust between suppliers and clients, even resulting in a complete breakdown of relations.
By consistently making swift payments on time you can expect to build better relationships with your suppliers, increase client satisfaction and ultimately have this positive impact ripple throughout the supply chain, delivering a multitude of benefits.
You can also potentially save a lot of money with early settlement discounts and establish your company as “easy to do business with” – a highly sought after reputation.
So, what can accounting teams do to ensure seamless payment processes and obtain these benefits?
Key challenges for 2015
A 2015 Accounts Payable Survey report, prepared by APN®, examined the key challenges facing Accounts Payable over the last year. One of the key aspects of the report was automation. Although general levels of automaton have slowly risen, speeding up invoice processing, many organisations still rely on outdated, sluggish manual invoice processing.
The number of companies now working in an almost entirely automated fashion (deemed to be less than 10% manual) has increased by 5% this year to 19% – but clearly, this uptake is slower than anticipated – and many organisations are suffering as a consequence.
Automation provides the ability to centrally manage the process, assign tasks automatically and define a workflow – allowing you to track invoices from received to payment. Clearer visibility means that they are more likely to be paid on time.
If you are keen to realise the benefits of quicker payments via automaton and optimise your Accounts Payable department, you can download our free white paper ‘Empower your Accounts Department’.