by Thomas | Jan 18, 2022 | Accounts Payable
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Vendor Vetting Process
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Accounts payable workflow is one of the most important parts of a business, and vendor vetting helps the business to divert risks if the supply chain goes awry. How are they linked? How does automating the AP workflow help in vendor vetting? Many such questions will be answered in this article.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_single_image image=”2808″ img_size=”full”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]There are many aspects of a business you just can’t ignore while running one. Vendor vetting is one such aspect where you cannot compromise. Read on ahead to find out what it is and how you can do it in your business.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
What is Vendor Vetting?
Vendor vetting put simply, is a risk management procedure that businesses often do to avoid threats from any supply chain crisis that may occur. People select vendors to become their partners, but the vendors should be compliant with the standards and regulations of the company. The vendor’s requirement might vary from company to company, which means, even if two companies are selling the same product, they might have different regulations for the vendors, depending on their geographic location and other factors.
Vendor risk management is an important precursor to vetting. Evaluating your potential vendors and the risk associated with them can reduce any disruption associated with the process.
Here are the steps to make the selection of these vendors easier. Proper vendor selection criteria have to be set up, search sources for suppliers, establish a few ground rules for the suppliers to come, and finally, compare the final list to recruit a vendor. Vetting proper vendors can make a business much more efficient.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”2/3″][vc_column_text]
What to consider while vetting a vendor?
Various factors need to be considered before you delve into vendor vetting. You need to understand the impact of this decision on your business; they are ultimately the decisions you need to make or the needs you have to fulfill via this supplier. Here are the impacts a vendor will have on your company:
- They provide some functionalities to the business; they generate the needs and requirements. This is directly related to the AP workflow as it is a workaround for any form of supply chain disruption; it is a safety net to fall on.
- They expand your business network a lot. It increases the collaboration of all suppliers and makes payments easier. This, in turn, also reduces business costs, which is a big plus point.
- They can easily be integrated with ERP systems and the AP workflow of your business. They help validate your budget and help in maintaining a business document workflow.
- They help expand the business in the global deployment of the workforce and business. They help in multi-currency transactions, which is an important part of your workflow if you are working in multiple countries or multiple languages.
- They help in building an ecosystem approach, which means that you can have multiple vendors for multiple products. This way, one person doesn’t have all the load, and you can get a much more efficient job done.
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What is AP Automation?
Accounts payable are the part of a business that helps you pay the vendor you have vetted, so automation has a big part to play in this process. But before that, you need to understand what automating your accounts payable workflow entails. Automating means that every process that is done manually will be done by a computer. While some companies manage a semi-manual AP workflow, completely automating it would mean each process is done by software or some artificial intelligence. To achieve this, you need to reform your entire workflow to accommodate digital data entry and digital payments to make sure everyone can operate the technology.
How are they linked?
Accounts payable and vendor vetting are deeply linked. Automation makes vetting easier; you also need to know what kind of vendors know how to use digital payments and accept online receipts. Automation includes any form of additional costs that may occur in the process, taking into account every little detail.
This entire situation leads to a lot of benefits for both parties. The supplier gains a trustworthy partner, while you gain a lot of discounts and a good network. This way, you are bound to get good products even if you expand, as you have established a sense of goodwill with your supplier, which will always carry on as the trust between you.
Conclusion
AP workflows and vendor vetting are two very important processes for a business. While they are not mutually independent, you cannot slack off on either, as they can greatly affect your business to make it or break it. Vendor vetting is necessary for a business to make sure that their work is done efficiently and they have secured a vendor for their needs in a specific sector.[/vc_column_text][/vc_column][/vc_row]
by Thomas | Jan 6, 2022 | Accounts Payable
Automating this process can be a hassle, but there are various ways in which you can ease into this transformation. This way, you can make sure that no employee feels left out or anxious.
This article holds the key to easing into the transformation of automating the AP workflow. Go through this article to make sure that there are no hitches in the AP workflow transformation.
Paperless Automation
Optimizing the entire AP workflow is a very obvious solution to make the entire process efficient and easy to use. But it comes with its drawbacks; many people who aren’t used to the digitized system can mess up and cause losses. To ease them into a system with paperless automation, the first step you can take is to give the employees trials before converting entire systems to a digital version.
You can conduct workshops and reinforce and reward behavior that enhances the team’s morale and the mentality to use such a system. This process saves a lot of money, it makes it so that you spend next to no money on the invoices, and the entire process, from data entry to the final payment, can be done cost-effectively and efficiently. Paperless automation is one way to make easy transitions, but you need to be prepared before any such change. Otherwise, you might end up making your employees anxious.
Streamline your workflow
Even for an automated workflow, errors while data is entered or the signing while cheques are being made can be harmful to the company as a whole. The more complex the systems, the more the chances of errors to occur. There can also be various hindrances in the approval process and tasks that have to be mandatorily manual. To reduce the chances of errors occurring, you need to streamline the entire process and standardize the quality of this work.
This form of centralized work works well for the company too, as it is believed to be quite organized. In the case that the company has multiple branches and you are the head of the AP team, all the company’s invoices will come to you for approval. Data redundancy can occur in such a situation which should be avoided wherever possible. But the fact that all the data needs to be centralized before moving forward stands; it is necessary for a streamlined workflow.
Firm up access controls
Access controls should be limited to a few people; that way, there won’t be too much of a chance of error. It also minimizes the duplication of data in case someone copies the data and reduces the chances of fraud. By limiting access controls, you might be cutting down on a small amount of transparency, but it increases the quality of the work by a huge margin. It is also one way to ensure that no one messes up the entire system by entering the wrong data unknowingly.
Giving the AP controls to specific people works well with the idea that the access controls have been secured and there is little to no chance of the breach of sensitive data. These invoices are often worth millions, and a small change here or there can cause the entire economy of the company to come crashing down. So tighten your hold on the access controls.
Standardize payment
Just like the workflow was standardized, if you standardize the method and delay before the payment, you should be able to build a good amount of goodwill with your suppliers. They will know what to look for to get the payment and when to expect it. This sets a flow that can’t be disrupted until there is an emergency of sorts in the company itself. This payment can be standardized to being online payments (It’s the easiest way to make payments, the most cost-effective too), cheques, or simply cash (This is rare in big businesses).
However, this standard way of payment shouldn’t include negotiations or renegotiations. If you can lower the costs or get more supplies for the same costs, go for it. Avail discounts whenever you can, wherever you can. Being efficient in the costing of your supplies is as important as being efficient with your AP workflow.
Keep information up-to-date
All the information, particularly the supplier information, should be up-to-date. This means that if any information is out of date, it can cause major issues in the company, along with huge losses. To avoid this, try to remain updated on the various contacts of these suppliers.
Conclusion
In conclusion, keeping the entire process efficient and streamlined is very necessary to the health of the company. Keeping this in mind, take care of the AP workflow, which in turn takes good care of your company.
by Thomas | Dec 29, 2021 | Accounts Payable, AP Automation
Audits are a common happening in the business world. It’s nothing to worry about, if you are running a successful business, an audit is just natural, but neither is it something to scoff at. It can get the company to lose its status in the market if the audit doesn’t go well. Taking care of how your company works is a big responsibility, and one essential part of it is the accounts payable workflow.
Automating your AP workflow can thoroughly impress your auditors and set you up on the path of success. The following article talks about AP automation, how it affects invoice compliance, and how it all affects an audit.
What is AP automation?
Accounts payable are the most important part of a company’s ledger. These are the accounts that the accountants maintain to look at the cash inflow and outflow, the accounts of all the suppliers. This used to be done manually or in a partially-automated way, where the human element was still present. Such a system has its drawbacks. When humans enter the data into these databases, they tend to make mistakes, like duplication of data, not entering some data, or even incorrect data that doesn’t match with the invoice receipts.
To get rid of such errors, AP automation is one of the best ways. It automates the entire process, from the data entry to the payment ledgers; everything is maintained safely and permanently by software. All we need to do is make a few tweaks here and there, and the perfect AP workflow is ready. Automation has become quite essential in the past few years with the idea that companies should go paperless and human interaction needs to lessen.
What is invoice compliance?
What is compliance? It is following the rules set by the authorities and, in this case, the invoice. Once the invoice receipt is generated by the AP workflow, it needs to be followed, lest there is some error. Once automation is done, though, the chance of any error occurring tends to zero. This means that any invoices generated should be complied with; otherwise, it will lead to the company losing all its trust among all suppliers. To avoid this from happening, the best way is to follow invoice compliance.
To follow invoice compliance efficiently, there shouldn’t be any errors in the invoice itself. In the manual method, the invoice goes through multiple checks. This can be a herculean task, getting to sign the approval from multiple departments just to get a single invoice through. There can still be some errors that make it through to the final approval and get passed. In such a case, compliance is still necessary; this is bound to tarnish the name of the business. To avoid such errors, automation can help out a lot.
How does automation affect compliance?
Automation is a process that drastically reduces the errors that can occur at a very basic stage of the invoice. It doesn’t let the invoices get duplicated, which can cause major harm to the company or misinterpret the data to be entered. Everything is done through software that eliminates any kind of human error that can happen. Another perk is that everyone shares the same system, which makes sure that all records are concurrent throughout the company. This makes sure that the compliance with the invoice is universal and everyone involved in the decision-making process is aware of the changes or the invoice itself.
This makes sure that invoice compliance occurs smoothly. It would pose a problem if the final invoice was riddled with errors or, even worse, was a duplicate. Duplicate invoices are a major source of problems for such companies; they can cause huge losses. This is all eliminated by automating the AP workflow. Automation is a lengthy process and can be a hassle at times, but it is worth it in the end.
How audits are affected.
Audits in the business world are quite common. They are not fun for anyone; they are an internal assessment of the business processes of the company. Automating the entire process of the accounts payable workshop gets the work done in a matter of seconds. The hassle of showing all the receipts can be lessened by sending all the digital files. These processes happen in a matter of a few clicks. Anything that makes business easier should be welcomed with open arms, making automation a top priority for a lot of companies.
Conclusion
In conclusion, if you are a firm looking to expand your profits and still are using the manual method of AP workflow, you need to upgrade to AP automation. It makes work a lot easier, minimizing the manual effort put into the workflow and making management a lot simpler.
by Thomas | Dec 16, 2021 | Accounts Payable
What are accounts payable controls? There is a short answer to this and a long answer. The short answer is that it is the mechanism created to mitigate the risk of losses on the side of the AP team and, subsequently, the company.
Coming to the long version of the answer. To understand what account payable controls are, you need to look at the various types of AP controls that exist. In this article, we’ll be delving deep into AP controls.
Obligation to pay controls
There are various sub-parts in understanding this control, but here’s a basic overview. This control exists to approve payments that the authority needs to approve. It shows that the invoice is ready to become a supplier invoice. It’s one of the primary controls and isn’t as imminent as the other controls. It does have a lot of applications but doesn’t exert much pressure over the entire workflow.
Here are some of the uses this control has:
- It makes the AP team assemble the invoice and authorize the purchase order. The invoice is thoroughly reviewed and checked for any errors before passing it.
- It approves purchase orders. The AP workflow is closely related to the procurement department; this department looks into purchase orders and makes sure that all the orders have been approved by authorities before the invoices for the same are sent out.
- It uses the three-way match approach. It’s easy to understand this three-way approach; in this, someone from the payables staff checks the invoice receipt and gives it the approval to move forward. Using this process can make the entire process quite methodical, but it is quite slow. It can break down easily too, but that can be taken care of by an automated AP workflow.
- To get rid of duplicates. Duplicate invoices can often be the bane of the entire workflow. Getting rid of these is essential, and that’s what this control does.
Data Entry controls
Data entry is an important aspect of AP workflow. This control checks whether the information has been entered into the invoices and the databases and their validity. An AP workflow must manage how and how much data is entered, as any misstep can cause huge losses for the company. Data entry controls have four primary functions.
Here are the functions of Data Entry Controls
- It enters records data before approval. The basic function of this control is not to get approval but to make payments to the suppliers. Via this control, all the invoices are recorded together into the system, making it easy to handle.
- It also records data after the approval of the invoice. It makes sure that the AP team has looked into the invoices once before entering them into the database. This way, transparency can be maintained.
- It gives the invoice numbering guidelines. The worst error that can happen in an AP workflow is the error of duplication. To prevent that from happening, a proper numbering of all invoice sheets is necessary. Data controls enable the AP team to do so but expect the users to keep a consistent way of numbering so that the system isn’t confused.
- It matches the budget in financial statements. The invoices should be directed to the right department. Discrepancies in this rule can lead to the budget toppling over, so this needs to be handled with utmost care.
Payment controls
The third and final category of controls is payment controls. They exist to track payments and make sure that the supplier has received them. In the case of electronic payments, it’s a bit redundant because the payments are immediate, but if for some reason it doesn’t pass, the whole situation falls under the jurisdiction of payment controls. It has five major functions in offline transactions.
Here are the functions of payment controls:
- It divides the work among the team to split printing checks and signing duties. This makes sure that someone is cross-checking these checks before signing them off. This way, the chances of error are decreased significantly.
- It makes sure that the unused checks are secured in a locked location. This reduces the chances of fraud that can happen if these checks were to fall into the wrong hands.
- They help in tracking the checks via their check numbers. In case any checks have been sent from the company but not received by the supplier, the firm can track them by their numbers. The number is unique to every check and can help the bank find out where the check is in its processing stages.
- The last two functions of this control are relatively similar. They are the allowance of the manual signing of checks and allowing multiple people to sign in case of certain conditions that might arise.
Conclusion
This article was a deep dive into what account payable controls are. Hopefully, you were able to understand the long answer and can work with these controls with this basic understanding.
by Thomas | Dec 15, 2021 | Accounts Payable
[vc_row][vc_column][vc_column_text]Change is always a prospect that is hard for people to harness. AP automation projects can be one such big change that people find hard to settle into. Implementing automation into a manual AP workflow can be hard because of employee resistance and/or lack of support from management.
This article will tell you how you can transit into a digital AP workflow easily and gradually while easing the employees of your business into this workflow.
Build a structure
The change you are trying to bring about shouldn’t be sudden; it should be planned and gradual. If someone asks you why the change is occurring, you should have a solid answer to that. A haphazard shift can cause confusion and chaos among your employees, which is an unfavorable situation. You need to build confidence that the changes that are being brought about are the right way to go, and without it, the company will fall behind. This should also be able to sway the decision of the management to lend you a hand.
Another important factor that you should take into consideration is giving the employees incentives for change. They should not feel like they’re being neglected; it can be a major cause of anxiety among them which should never be the case. You should have the skills to support your claims, though. You should act as an inspiration for your employees through times of change.
Build a case
If you’re taking the initiative to automate the entire AP workflow, you should be well aware of the problems you might face in the entire process. You also need to consider the challenges you are facing in the manual AP workflow and weigh out the pros and cons of shifting it to a digitized workflow. Your desire to improve the efficiency of the entire process shouldn’t go unnoticed in this case. You will need to create a document listing out all these points so that the higher-ups can understand the problem and take the necessary actions to help you out.
You need to make sure that there are shared goals with other departments of your company so that you can get greater support for your ideals. Avoid any discrepancies in your reports and your actions to get better support for automating AP workflow. This leads us to the next step in this endeavor.
Establish a vision and communicate
The next step is establishing a solid vision that everyone can follow and have surety that they’ll achieve something great via this change. The vision shouldn’t just be well established; it should be well communicated with everyone in the company to keep maximum transparency. The reason and the advantage of keeping this transparent attitude will reflect when all the employees get ample time to prepare for the change. This way, no one will be taken by surprise and can experience a harmonious change in the company.
Along with a structured plan, you should also be able to communicate well what your ideas are and how they’ll bring a change for the betterment of the company. This should be able to convince a lot of people as automating workflow can improve the efficiency of your company by a thousand-fold. This communication plan should be perfect for the same reasons. Any flaws can lead to your plan not getting approved.
Bring change in behaviors
The next step is basically a preparation for when the plan has been implemented. You need to train your employees as to how to do the work after the AP workflow has been automated. However, all this training is useless without a real-life scenario to work around. You can have various drills to get people used to the new system. The AP team needs to take charge in such a situation and teach everyone how to operate without disrupting the system that would be set in place. You should promote behaviors that set good examples for other employees and reinforce people to do so.
Sustain that change
Once the plan has been implemented, the AP team must take follow-ups from the employees to make sure that the plan has been implemented well. They should inform the new employees as to how to operate the existing workflow. The AP team should set benchmarks as to how well the AP workflow has been operating.
Conclusion
Automating a workflow is a cumbersome process that can fail at times. But if you follow the process mentioned in this article meticulously, there is a high chance that your plan will succeed and your AP workflow’s efficiency will increase drastically. It’s a risk worth taking and a plan worth elaborating upon if you have the chance to do so.[/vc_column_text][/vc_column][/vc_row]
