Becoming a business owner is a dream come true for many entrepreneurs. There is a sense of pride and accomplishment that comes with owning your own business. Just because you are finally a business owner doesn’t mean you are ready to tackle all the responsibilities that come with operating and running a small business.
More often than not, new business owners don’t even know the importance of accounts payables and the function of Automated accounts payable systems. Here are some AP basics that will serve as your introduction for this specific financial matter:
What Does Accounts Payable Mean?
The simplest way to explain accounts payable is it is the money your company owes its vendors and suppliers. This includes a comprehensive list and all the recorded debts and liabilities for all of the purchased services, goods, and supplies.
Basically, if there is anything a company has received from a vendor without paying for the goods and services, it is classified as accounts payable.
Why Document The Accounts Payables?
Keeping track of the business’ AP and invoices ensures the company knows who it owes and how much. Each business has their own set of accounts payable system in place that allows them to track payments and invoices.
AP systems were once manually encoded and invoices were copied and duplicates were sent from one department to another for approval. While the manual processing worked for small businesses in the past, today it is considered as obsolete and inefficient.
The Future Of Accounts Payables
Today, thanks to technology and constant innovation, automated accounts payable systems are available for use. Businesses big and small are turning to AP automation to help them process invoices faster and prevent any costly human errors. These state-of-the-art and up to date systems allow business to keep track of their accounts payables with a few clicks on the computer.
What Are The Advantages Of AP Automation?
Manual processing of a single invoice can take up to 16 days from start to finish which results in several delayed payments and angry suppliers. With AP automation, the invoice processing only takes 3 days to complete. Timely payments to vendors and suppliers result in loyalty and priority treatment that comes with discounts and other privileges.
The use of the automated AP system also reduces the occurrence of fraud, theft, and duplicate payments; all of which can be damaging to a company’s finances. All of these costly mistakes are easily detected and eliminated by the automated system but is hard for a human employee to detect immediately.
Is AP Automation Worth The Investment?
There are more pros than cons that come with investing in the best AP automation system that is perfect for your business. While the use of the system may require a monthly fee, the savings and the security it offers makes up for the expenses. An automated AP system is a great investment for any new business owner, especially if they want to stay on top of their finances and reduces the likelihood of damaging their business relationships.
Automated accounts payable systems are not just for big businesses. Let our team at Nexus Systems show you how things work and how our business solutions can help your brand.