AP Management

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What is AP Management?

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AP Management = accounts payable management

Accounts payable is money owed by a business to its suppliers shown as a liability on a company’s balance sheet

(source: https://en.wikipedia.org/wiki/Accounts_payable)

Account payable management is equally important as accounts receivable management, it is the way how you treat financially your supplier.

AP Management is the other side of AR Management.

AP management is mainly important for the determination of the outbound cash flow and for supplier management.

To have a proper AP management you have to into the deep details of corporate treasury management and purchasing management.

The most important TO DO’s regarding management your accounts payables are :

  • pay invoices on a predetermined schedule of the company’s choosing
  • ensure the accuracy and authenticity of invoices that the company pays
  • process accounts payable paperwork with a minimum of handling and expense.

How can I improve my AP management?

To improve your AP management a lot of things can be done, the main ideas you should follow are :

  • Centralizing accounts payable processing and reporting through a shared service environment to ensure all staff members adhere to common practices and standards and measure their performance against established business metrics. This has the added advantage of enabling you to accomplish more tasks in a faster timeframe and with fewer resources, ultimately reducing enterprise costs.
  • Moving towards a paperless processing environment. With an eProcurement system, for instance, you can communicate electronically with vendors and customers to automatically generate purchase orders (POs) for each new order, electronically validate and accept invoices, approve requisitions, track goods received and pay invoices on a timely basis. Depending on the level of automation you select, you may even be able to scan invoices automatically, track delivery receipts and resolve disputes electronically rather than through manual follow up.
  • Adopting more robust governance practices, which can reduce the risk of manual error and strengthen internal controls around accounts payable processing, and contract review.
  • Setting up supplier portals so that suppliers can electronically track the status of orders, delivery schedules, potential product shortages and payments received. In addition to reducing time spent on these processes, these systems also cut down on manual errors, improving order accuracy.
  • Creating management workflows to enhance the efficiency of your accounts payable processes. Management workflows can help you identify and resolve system bottlenecks and streamline process handoffs to improve liquidity management in the most effective manner possible.
  • Strengthening purchasing approval processes by defining the level of management authority required to make various-sized purchases.

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