No one likes paying bills. There’s so much grief surrounding the concept of owing money, but it doesn’t have to be that way. Paying bills is a lot less stressful when you have enough money and a game plan to cover them.
Enter the concept of accounts payable, the fancy way of describing paying bills and managing the outflow of money. This encompasses payroll, debts owed in addition to regular payments for services, products and supplies.
In a small business or start up, accounts payable, or A/P can feel like a stressful guessing game. When the inflow of cash is not 100 percent planned, the outflow tends to feel just as sporadic. Most A/P challenges can be summed up to common disconnects between cash flow management, billing accuracies and payment methods. With some changes to your systems, paying bills can once again become a less stressful event.
No matter what kind of business you are running, A/P will always need to be a part of your operations. Part of its arduous reputation is because it’s a non-value added activity that can be time consuming. The process typically goes like this: a bill arrives by email or mail, a designated individual looks over it, enters it into some type of accounting software, then codes it to a specific account. Once that it finished, typically they print or write a check and send it out. This is an outdated process. Just reading it sounds long and boring.
Why is it so important to have a reliable process in accounts payable, you ask? Without efficiencies that can keep the bill pay process simple, it becomes increasingly time consuming and it increases the probability of mistakes.
The best way to improve a required, non-value-added activity is to streamline the process and create efficiencies. By minimizing time spent on this, you save money. By making it efficient, you require less checking back and manual review.
Accountfully manages this implementation for you and uses a system that solves a lot of common A/P challenges; Bill.com. This system handles your A/P by facilitating review and payment in an organized and efficient manner. It also syncs with Quickbooks seamlessly with your chart of accounts and vendors, so no more manual coding. By implementing this efficient process, many of the common challenges of A/P can be minimized or eliminated.
If you thought paying bills was frustrating, imagine paying them twice. A vendor may send an invoice again that you have already paid for. The time lag between the vendor receiving payment and sending another bill as a reminder is all too common. This is a classic cycle, especially when paying by sending a check. It can also happen if the bill that was entered into your accounting software is not tagged as paid. These hiccups are a direct result of manual efforts. Most small businesses don’t have enough cash to float big mistakes like paying the same bill twice.
When you are using Bill.com, the vendor will get a notice immediately saying payment is on the way - whether by check or by Automated Clearing House (aka “ACH”) as soon as you’ve scheduled it. This just saved time responding to that email or phone call from your vendor asking, “Hey, did you pay that bill yet?”
Similar to paying twice, is overpaying. It is important that you have oversight on what you are being charged. Is the rate correct according to what was agreed upon? Correct amount of product or hours? Even small deviations can add up, so it is important to stay on top of things.
When we set up the approval workflow in Bill.com, this defines who gets notified, who reviews and who approves payments. Then it is automated. The correct steps are followed each time and it goes to the right person, who will have oversight on the details of each bill.
When the bills are already prepped and uploaded for your review by Accountfully, it allows you to focus on the review and approval side, not uploading bills.
When we enter invoices into Bill.com, they will go into a pay queue. You will know what is ready to be paid right away. No sifting through papers or searching through emails. The approver can go in, review these bills and schedule a payment. With the click of a box, the payment can be made on a certain date and via check or automatic checking deposit. You can also invite vendors to enter their bank account information so that payments can be made via ACH payment. When efficiency is at stake, ACH is the way to go, every time. The more vendors on board with this, the easier it is for you (and them). No more waiting and checking if they cashed your check.
Paying bills comes right back to cash flow. Without cash, bills are hard to pay. Existing cash on hand needs to be organized so that your bill payments don’t harm your ability to generate future sales or more cash opportunities. Especially in inventory based businesses, large amounts may be tied up in purchasing goods. Future revenue may need to be earmarked for that looming purchase.
Are you making good decisions based on your cash flow? When your cash flow is being managed by Accountfully, that is an easy question to answer - yes. Since we provide up to date reports and can help forecast sales, you will be able to see what is coming in and how to apply it to future payments. Since we also handle your accounts receivable, we can help line up what sales or incoming payments are in the works and align them with bills you are getting ready to pay.
When large amount of current and future cash needs to be set aside to pay for items to facilitate sales, don’t fret. This can mean putting off paying other due items to ensure the big one is spoken for. When this challenge arises, your best bet is to communicate with your vendors if you can’t pay on time. Let them know what your payment game plan is, and make sure you do have a game plan.
When you have a process in place that shows good faith to paying vendors (like using Bill.com), it can be a much easier conversation to have when asking for more time. With Accountfully on your side, we have these conversations, not you. Being able to pay via ACH is a great point-earner with vendors as well. If they know once you can make the payment, it will be in their account quickly, that is a major value added. The less time waiting for and cashing a check, the better for any business.
Accounts Payable doesn’t have to be sweating over a pile of past due bills and hand writing checks. With the right efficiencies in place and a handle on your cash flow, payments can flow out with a sense of ease.
Accountfully can help you implement and manage these systems. We can show you how your cash flow can work in your favor when it’s time to pay bills. If you think your business could use some help on the A/P front, we are here to help. Tell us about your bill paying woes. Let’s talk more and get a plan together.