If media reports are to be believed, Canadians look to be a particularly unhappy lot right now. The recent bout of inflation and interest rate rises appear to have precipitated a specific phase of economic suffering that has spilled over into personal lives, and that misery appears to be uniform across demographic and socioeconomic categories. According to one survey, financial troubles, inflation, and high interest rates are having an impact on Canadians' mental health, driving concern about housing and food. Millennials, particularly those who own a home, appear to be the most vulnerable to economic downturns as interest rates rise on tight debt burdens and economic damage wreaks havoc on the economy and expectations. Burdened by debt and rising housing expenses, three-in-ten Canadians are "struggling" to make ends meet, with mortgage holders reporting trouble meeting housing bills up 11% from last June. If you have a place to live, you struggle to pay your bills, and
This can make it hard to work with suppliers, delay cash, and even lead to fines for being late.What's good? It is easy to find your way out of what looks like a tough AP puzzle. That method is to shorten the cycle of accounts payment (AP cycle). This post will talk about the whole process of AP processing and show you how to speed it up by hand (if you want to) or with AP automation tools. You are the only one who can decide which method works best for the AP processing cycle of your company.Let's talk about what an Accounts Payable (AP) cycle is before we talk about how to speed it up.How long does it take to pay all the bills?
The P2P loop includes a whole run of AP processing
The buying team starts the process by sending out purchase orders (POs)Next come the reviews and processing of the invoices. AP is finally going to be called on. Before giving their approval for payment, they carefully look over the bills by comparing the invoice, the receiving report, and the buy order three times. An important part of accounts payable is keeping track of payments and making sure they are matched up.Why is it important to have an easier accounts payable (AP) cycle?For your business to stay financially stable, the Accounting Payable (AP) routine must work well. It's good for your health in these ways:Deep checks, like compression, MSME checks, e-invoice checks, three-way matching, and others, make sure that paycheck differences are lessened. There is no risk of overpayment, underpayment, or seller risk with these checks.Get along better with your vendors: You can set payment dates and times and get notes when you need to with an automated Accounts Payable (AP) cycle that works better. That, along with automatic payments, makes sure you never miss a payment, which lowers your DPO (Days Payable Outstanding) and makes your relationship with your suppliers better.
This benefit is ten times greater when you use AP software with built-in dashboards that show you important info and make cash flow more clear
Simplified coding for the general ledger (GL): If your Accounts Payable (AP) cycle is automated, your AP tool will work with your accounting program without any problems. This lets your software give bills the right General Ledger (GL) codes on their own when you handle them. This makes sure that financial reports are correct and makes the budgeting process easier.The steps in the process of paying billsIn the full-cycle AP method, each step is very important for making sure that everything goes quickly and smoothly. Take a look at the key moves:Putting together purchase orders (PO) and accepting themThe first step is to make the deal official.Making the transaction public is the first step in the Accounts Payable (AP) cycle: After choosing a vendor, an official Purchase Order (PO) is sent out that spells out the terms that were agreed upon. Some of these words are:an exact list of the things or services that are neededImportant Details and AmountTotal price and price per unitDates when deliveries are duePayment terms (like early payment discounts)Quality Control: When goods or services are delivered, they are carefully checked against the PO by the department that is getting them. This includes checking the amount, quality, and papers that come with it, like packing slips and invoices.Going over and matching: The AP team looks over the payment very carefully to make sure it is right and complete. At this step, there is a three-way match to make sure that the original Purchase Order (PO) and the receiving report match up with the goods or services given in terms of number and quality.
A bill from the seller
Sending money to suppliers
Process of approval: The bill goes through a formal approval process after the three-way match is established. Different levels of permission may be needed based on the size and funds of the group.How to Pay: Once the purchase order is approved, the AP team pays the vendor using the way that was chosen in the PO. It could be a check, a bank transfer, or a deal done online. Early payment discounts are available, and payment plans are kept up to make sure that debts are settled on time.Write down a report of what you found.Check-ups often The accounts payable (AP) team checks with suppliers on a regular basis to make sure that payments are made on time and that there are no late fees or penalties. Any disagreements are quickly found and settled.Telling the truth: Careful AP data is needed to make sure that financial reports are correct and on time. The bills are added to the general ledger when they are handled. This gives you a general idea of how well the company is doing financially.Problems with making the cycle of paying bills more efficientThe better you understand the flow of accounts payable, the more you can do it. You should know what you're up against, though, and the problems that come up during the Accounts Payable Cycle, before you try to figure out how to make it much easier.
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