The pandemic that struck in early 2020 has ravaged the entire economy with its ripple effects across every sector of industry. Though few sectors had to cop severe blows compared to others, we all can agree that cash flow has been a major problem for everyone in the market.
Sales, Accounts Receivable & Accounts Payable are three crucial factors that impact the cash flow and bottom-line. COVID-19 has had a varying impact on businesses based on how these three systems were affected.
In this blog, we are going to briefly explain the impact of the pandemic on the AP of businesses. And then provide valuable tips that can help businesses build a resilient Accounts Payable system post-pandemic. Read on:
COVID-19 & Its Impact on Accounts Payable of Businesses:
The disruption caused by the pandemic has bent the back of businesses that were still relying on manual Accounts Payable. With no possibility to shift online, these businesses had to cope with financial disruption. Businesses that were relying on automated or hybrid AP also had to face quite a few challenges in shifting rapidly to secure remote accounts payable setups. Even businesses whose invoice volume was up to had to experience reduced productivity and efficiency in AP.
The disruption led to payment delays for businesses that did not have enough traction. And few businesses that did, negotiated for better payment terms or early payment discounts. Reducing the cost of invoice processing has been the primary target for most businesses which led to increased adoption of automation technologies and outsourced Accounts Payable services.
In short, the ripples of the pandemic stretched afar. The aim for every business right now is to build an Accounts Payable that is efficient enough to improve their cash flow and be resilient enough to weather the potential economic storms in the years to come.
If you are business with the similar aim, then here are the three lessons you must learn to build a string and sustainable Accounts Payable for your business.
Lesson 1: Proactive & prompt communication with sellers is the key: Given how the pandemic has pushed every business into the position of uncertainty – the importance of communication is what most AP teams must learn post this pandemic.
Prompt, clear and proactive communication to the sellers when it comes to information on their respective payables can help any business improve the situation right away. For this to happen, an AP team must build a strong communication initiative right from the start of their journey. Building trust with prompt payments does help here but every AP team can start by enabling dashboards that give more visibility on the payment timelines. For this to happen AP teams must completely shift to e-invoices, which is our next takeaway.
Lesson 2 – Adopt e-invoicing can solve many problems: Building on strong and sustainable solution must be the focus of AP teams and adopting e-invoicing is the first step every business can take for this to happen. For example, when your seller’s list runs long, it can be difficult to communicate with all of them while getting all their invoices processed simultaneously.
Adopting an e-invoicing system simplifies your invoice processing and tracking and enables prompt communication about the status of the invoice to the sellers. Imagine the time spent in retrieving the lost and misplaced invoicing, data entry, scanning and verification, manually updating payment status to your clients – all this can be avoided by resorting to e-invoicing, says our Accounts Payable experts at Outsourced Bookkeeping.
Lesson 3: Move away from manual AP: Accelerated invoice processing, more visibility and control, reduced risk of fraud, improved seller communion – manual paper-based AP stands as a barrier to achieving an improved Accounts Payable process.
Automation is no longer just an option when it comes to Accounts Payable – it is a necessity. Though all the high-performing Accounts Payable teams leveraged automation before the pandemic, it has been more of an option for improvements.
Businesses that relied on traditional paper-based invoices did not want to make the jump, which was understandable. However, the pandemic changed and let us say forced remote accounts payable and automation into accounting and shift was quick.
Automated AP improves accuracy, reduces processing time, and saves money as many businesses have already realized this point. But what makes automation necessary is its ability to enable remote accounts payable services and future proof your AP. Businesses can also seamlessly seek help from remote accounting firms for outsourcing their accounts payable services too.
How Outsourced Bookkeeping can help?
As a back-office accounting firm, Outsourced Bookkeeping is equipped with cutting-edge Accounts Payable automation tools and software that can help any business leverage the power of automation to improve their AP process.
Whether you are looking to fill the gaps in your currents AP, or aim to completely revamp and fortify your AP automation, our Accounts Payable experts at Outsourced Bookkeeping can help. You can contact us here: https://outsourcedbookeeping.com/