Management of accounts payable or accounts payable is not an easy thing. Many challenges are often faced by business people related to this one thing. Starting from a long and complex process, lack of transparency, data that is not centralized, and so on. Luckily, now there is an account payable software that can be a solution to solve this problem.
In financial statements, accounts payable (AP) or debt accounts reflect the number of short-term obligations of a company that is due in less than one year. This item is recorded in the company’s balance sheet, under current liabilities.
Account payable is one of the vital components in the company’s balance sheet. Investopedia explained that managing this account is very crucial in maintaining cash flow. If the AP number increases, it means that a company is buying more business needs on credit than cash. Conversely, if the AP number decreases, it means that the company has succeeded in paying off short-term debt faster than buying new business needs on credit.
A company, especially a medium and large scale, generally has an AP department or division to manage accounts payable accounts. Broadly speaking, the following are the tasks of the team:
- Coordinate and collaborate with supply chain departments, such as sales, purchasing, vendors, production, warehousing, and others
- Checking company purchasing and shopping documents
- Recording of purchase and shopping transactions
- Payment of verified purchases and accounts payable
- Make purchase reports and balances
- Store and archive all proof of purchase/payment transactions
- Supervise and monitor the company’s cash flow
From the explanation above, it can be concluded that AP management starts from the time the purchase order (PO) is received by the company to the invoice payment process and transaction recording in the general ledger. This process can be long and complex if not managed properly. This is especially true for companies that have limited human resources, such as small and medium enterprises (SMEs).
In the SME sector, the AP function is often carried out by accountants, finance staff, or even direct business owners. So don’t be surprised if many SME business people find it difficult to manage accounts payable. As a result, the AP process becomes messy, and in the end, it also affects the financial health of the business. This is where accounts payable software comes as a solution.
Why should you use a software account payable?
As previously explained, the AP process is a fairly long process and often contains complicated bureaucracy. If it’s managed manually, it’s more or less like this:
- The company issues POs to third parties
- The company receives invoices from third parties
- AP team verify invoice data
- The AP team records the invoice and asks the manager for approval
- The AP team executes payments and records transactions in the ledger
Accounts payable software
The above payable account management flow can be more efficient and effective by using Accounts payable automation. Because now you don’t need to do all the AP processes alone, but you can be helped by the technology provided by the software. The following are some of the features offered by a good Accounts Payable Automation:
- Storage of proof of transactions or invoices digitally
- An online approval system that can be accessed by managers anytime and anywhere
- Automatic scan technology or OCR (optical character recognition) to retrieve invoice data
- Digital payments directly from the platform
- Centralized dashboard to view company billing and invoice data
- Bulk invoice payment options
- Transaction recording system that can be integrated with company accounting software
- Expenditure analysis
- Good invoice tracking system
- Visibility of billing status
- The automatic payment scheduling system
With the features above, of course, managing accounts payable is easier. You as a business person don’t need to worry anymore about managing this account and can focus more on developing your business development strategy.