Tips for Saving Money Through Accounts Payable

Running a business is all about managing costs. In all industries, keeping the overhead low is essential. It’s also almost impossible. It feels like costs only ever rise, even while profits like to play their roller coaster games. Ultimately, managing costs gets a lot easier with some specialized help. Telecom Expense Management (TEM) might sound like it has a narrow purview, but it’s really a widespread means of identifying and resolving runaway costs. Despite the name, TEM resources (including audits, planning and software improvements) can revamp all corners of your business, even accounts payable. Here’s how.

Automation

Automation tends to be a key tip in saving money in every facet of business. There’s a reason for this. Labor represents a significant portion of overhead, no matter the task being done. Automation improves the value of labor, even in accounts payable.

But, automation offers a lot more monetary value than reducing labor-based overhead. Automating accounts payable can virtually eliminate late payment fees. It can also help you optimize early payment perks. Not all vendors offer these perks, and early payment across the board might not be compatible with your cash flow, but automation tools can help you optimize an early payment plan that gets the most value out of your payment schedule.

Going Digital

Digitizing accounts payable and automating the systems are concepts that overlap, but they aren’t identical. Even if you have personnel manually performing all of your tasks, having them done digitally still saves money.

Cutting paper costs alone can add up quickly. For instance, Bank of America estimates that issuing a single check can cost somewhere between $4 and $20. That seems ridiculous for such a tiny piece of paper, but this includes shipping and the labor involved in processing the check. If you have paper records and statements for the entire process of issuing a check, there’s a lot of wasted time and physical resources. Imagine if your payment costs were reduced by $4 every time you settle a bill (much less if you saved $20 each time).

That’s just with checks. All of your paper handling is expensive, and an accounts payable tool can cut into all of those costs.

Duplicate Invoicing

No one wants to admit that this exists, but duplicate invoicing is a big problem. Think about the sheer number of invoices processed by your business. How hard is it to believe that a single invoice number might be double entered? How hard is it to believe that an invoice might be double issued by a vendor? It’s obviously possible, and when it happens, it’s a pure waste of money.

A TEM audit can delve deep into your records to see just how many times you’re hit with double invoices. It can then offer solutions to the problem to make sure it doesn’t keep happening. Eliminating this problem is pure savings.

Processing Time

When it comes to accounts payable, the biggest labor sink tends to be processing times. This can be related to paper processing, but it can also come down to inefficient lines of communication. Here’s the thing, accounts payable software companies claim that they can cut your processing times by up to 47 percent. If that holds, then it means you’re improving the value of your accounts payable labor by 47 percent. Having people waiting for processing is a devastating source of waste.

Keep in mind that these savings can come in addition to cutting paper costs, saving money through electronic filing and the auditing that cuts improper spending. This is all adding up pretty quickly.

Improved Communication

This is the hardest perk to quantify, but when you think about it, you’ll see that this is a genuine opportunity. When you fix your accounts payable workflow, you get two advantages. You lower the burden on your staff, and you expand digital communication resources. Even if you’re already using digital communication with your vendors, your improved accounts payable resources make it faster and easier to pull up specific invoices or quote hard numbers in a negotiation.

More importantly, your accounts payable staff has more time on their hands to focus on communicating with vendors. This doesn’t just help with negotiations. It will also make you a favorite client. This can lead to better advanced warning with price and supply changes, first dibs on special offers and countless other advantages that stem from having a strong, reliable relationship with your preferred vendors. It’s hard to put a price tag on such value, but it’s easy to imagine how it’s good for business.

Investing in TEM grants all of these perks and more. You aren’t just buying a new software package that may or may not be useful. You’re investing in a management team that will help you select the best software, audit as many of your system as necessary, assist in negotiations and in every other way help you bring technology costs as low as they can be. Every dollar spent in TEM should net big returns, and accounts payable is just one area of the business where that can happen.

ABOUT THE AUTHOR: BRITTANY PECKHAM

Brittany grew up in Oregon, Wisconsin and graduated from the University of Wisconsin Business School with a Bachelor’s degree in Management and Human Resources with an emphasis in entrepreneurship. Brittany has been working with Valicom for many years creating content for the TEM industry to deliver the many benefits users and organizations can experience in utilizing TEM services. With a passion for social media marketing, Brittany enjoys applying creativity throughout various areas of her life while expressing creativity in everything she does and loves being consumed in projects, from start to finish.