It takes a systematic approach to Accounts Payable to avoid late payment of supplier invoices. The stamping of an invoice with a paid stamp can be a labour and cost taxing effect on a business with no strategy in place to optimize accounts payable as a critical internal business process. The performance problem of late payment of supplier invoices is examined and referenced to a recent Deloitte resource paper on the effect of managing accounts payable as a critical process with a major impact on cash flow management. Identifying the impact of late payment on your supply chain, your credit rating, and even increased stress on your employees is discussed. Photo credit (ID 109573589 © Travelling-light | Dreamstime.com )
Benefits of Implementing a Digital Procurement to Pay Platform: This is the seventh post in a continuing series exploring specific solutions available to the many business process problems identified under the general heading of AP Problems. The first post in this series is AP Problem #1: High Defect Rates here.
Late Payments of Supplier Invoices is a Costly Inefficiency with a Big Impact
Being late for anything is a source of severe frustration for all concerned.
This is especially true in the life of an accounts payable department.
With high volumes of accounts payable and purchase orders, it can be easy to find yourself drowning in outstanding invoices awaiting payment for multiple reasons.
The impact is far-reaching when critical supplier invoices are subject to late payment.
A recent and excellent white paper from the accounting firm of Deloitte Canada on strategizing accounts payable strategically for cash flow management caught out eye. This is a unique piece of common-sense recommendations as it explores the pro and con of how your company treats the account payable function. An excerpt published below is from Taking a Strategic Approach to Accounts Payable Management is a SnapAP recommended read on the impact of Late Payments on Accounts Payable and company performance.
“When it comes to working capital optimization, however, increasing payables should be a core strategy. To be sure, many businesses work this strategy by extending payables as long as possible to maximize free cash flow.
Unfortunately, this approach is not always the right one. In some cases, delaying payment can erode supplier goodwill, resulting in slower delivery times, less willingness to fix defects, slower responses to queries and more onerous payment terms.
On the flip side, paying early can sometimes yield substantial benefits in situations where suppliers offer discounts or rebates for early payment.” Deloitte Canada: Taking a Strategic Approach to Accounts Payable Management
To recap why late payments are bad for your business.
- Late payments can be detrimental to your organization’s valuable supplier relationships.
- Failure to organize and manage your AP process efficiently results in missed deadlines, leading to poor relationships and missed opportunities for preferable terms on key goods and services in the future.
- Additional interest payments and lost credit compound the problem.
- With so much on the line, reducing late payments should be a top priority, but it’s hard to know where to begin.
Late payment of invoices is a common problem in all sizes of business and one that SnapAP addresses with a complete end to end systemized process that will guide your payable staff in reducing to nil late payments.
Here’s how SnapAP addresses this AP problem of Late Payments to Suppliers:
- Managing the process with an automated electronic workflow can provide clarity.
- SnapAP’s intuitive and seamless paperless invoice portal allows you to streamline and automate all aspects of your supplier process.
- A system of guided steps starting at requisitioning and procurement executions all the way to final payment to all suppliers that auto-sync into your accounting programs.
- The result of SnapAP’s systematic approach to AP is maximized internal process efficiency while reducing invoice cycle time to mere minutes.
With SnapAP you’ll pay suppliers on time, every time.
The SnapAP process is transparent and hassle-free, so invoices will never slip through the cracks and trigger late payment penalties.
SnapAP eliminates the accidental late payment of supplier invoices.
SnapAP allows you to streamline the AP process from purchase to payment,
accessing all upcoming deadlines with a simple click,
resulting in fewer mistakes and reduced frustration in the organization
from late supplier payments.
The bonus of implementing the SnapAP procure to pay system is that it is easily scalable, completely customizable, and quick to implement.
Enhance your purchasing process by visiting SnapAP Procure to Pay to learn more about SnapAP’s paperless accounts payable system.
SnapAP offers a no-obligation Calculate Your Savings calculator submission form that may help you assess your decision to enhance your AP with automation and transparency for your suppliers. In return, you will get an initial savings estimate and a further drill down on potential savings if you prefer to investigate further.