Accounts payable is not rocket science. Having the right AP solution in place can easily streamline your workflow… And, not having one can quickly result in staff being overwhelmed, confusion regarding approval processes, and unnecessary expenditures in time and effort that take a big bite out of your bottom line.
So, rather than get caught up in the complexity of things, let’s KISS.
KISS: Keep It Simple Stupid. In other words, it’s important for you to realize there are simpler, proven ways to approach your AP process.
The payables process of most organizations grows organically and in parallel with the needs of the business. Over time, factors like added volume and additional office locations complicate and overwhelm those very AP processes that worked so well when the company was, well… smaller. Put simply, it can be a painful process when you outgrow — and outpace — your current AP processes.
At this point, companies normally explore two options: You either turn to a pricey accounting system upgrade OR you simply live with the current setup and adapt as best as possible. It’s up for debate on which option ultimately costs more. And, it’s not uncommon for organizations to choose the latter alternative as resistance to change is generally the road most travelled.
You’re Not So Different
There’s a belief that every company runs their AP differently. Yes, there is an inherent uniqueness in how different businesses within different industries operate. But, the accounting objective is always the same: Place an order, receive a bill, code the bill, approve it, and pay it. That’s it. In light of this, companies are simply running the same process – just in slightly different and mostly manual ways, which is easy enough to overcome with the right AP workflow solution in place.
A Simple Example
Let us demonstrate this point: The Ford Model T was introduced to the world through a standardized production process that minimized costs and maximized output and efficiency. Drawing on this example, it stands to reason that the benefits of standardization can also apply to the AP process.
To take this leap of logic a step further: If the accounts payable objectives and outcomes are generally the same across businesses, then it’s in a organization’s best interests to standardize and take advantage of the same concepts of efficiencies and economies of scale in their own payables process.
So, why aren’t businesses doing this?
The truth is most companies are not in the accounting business and many view accounting as a necessary evil. In short, they don’t have time to focus in on process improvement while running their business.
The Realistic Solution
Incorporating accounting best practices right from company inception is ideal, but hardly realistic — at least not until recently. Today, there are solutions that expand the functionality of conventional accounting applications and many of them are cloud-based and affordable to the small and medium-sized business. These solutions offer built-in best practices to help organizations with compliance and efficiency, which allow them to concentrate on the core competencies of the business, rather than the paperwork involved with running the business.
Creating efficiencies on your own, without prior experience, expertise, and tools can be extremely challenging. So, rather than trying to reinvent the wheel, take the time to explore your AP options and examine solutions that not only streamline your workflow but also contribute to your bottom line.