How to Manage Accounts Payable Effectively
Accounts payable best practices go far beyond just maintaining balanced books — they also play a crucial role in boosting your winery or specialty food business' financial efficiency. Managing AP effectively streamlines these processes to your advantage, keeping cash flow steady and improving supplier relationships. Discover how optimizing your accounts payable strategy helps you excel in competitive markets while bolstering growth and encouraging innovation.
Understanding Accounts Payable
Accounts payable (AP) refers to how much money your business owes to suppliers for services and goods delivered that you haven't paid for yet. A vital part of accounting operations, AP represents the short-term liabilities on your balance sheet. Effective accounts payable strategies help wineries and specialty food and beverage CPG companies maintain timely payments, fostering strong supply chains and business relationships.
Why Accounts Payable Management Matters
Your winery or CPG company can prevent supply chain disruptions and avoid production issues by keeping AP within the terms of your agreements with suppliers. Keeping these relationships healthy may also lead to better terms when you negotiate future contracts, potential discounts for merchandise, and service prioritization.
How Accounts Payable Impacts Company Cash Flow
Balancing the timing of outgoing payments with incoming revenue helps you manage your finances and AP effectively. Using accounts payable strategies like this helps you optimize payment scheduling and sometimes even take advantage of more favorable payment terms. This helps you improve your overall cash flow so you can invest in growth opportunities and better navigate financial fluctuations.
Common Accounts Payable Issues and Solutions
Unfortunately, some hiccups may occur when you're developing accounts payable strategies. Some issues to look out for include:
Late payments. Suppliers rely on prompt payments just like your own business, and late payments can damage relationships. Avoid this issue by using AP management tools for reliable payment scheduling with reminders and automated payment systems.
Manual processing. Working up invoices by hand can lead to errors and inefficiency, making automated AP systems a more dependable way to solve accounts payable problems. These tools speed up processing times and improve overall accuracy.
Visibility issues. Keeping AP management sequestered may hinder financial planning and decision-making by limiting the information key people have. Instead, use AP management tools for real-time reporting that enhances transparency.
Fraud risks. Properly monitoring accounts payable processes helps reduce fraud risks. This monitoring includes putting strict internal controls into place, performing regular audits and securing the payment methods you use for suppliers.
Best Practices for Managing Accounts Payable Effectively
Accounts payable best practices help wineries and CPG companies effectively maintain financial stability and supplier relationships. Let's look at what these AP methods entail and the benefits of using them.
What Are Accounts Payable Best Practices?
AP best practices include several key components. Essential elements include:
Paying invoices promptly and implementing robust payment schedules
Establishing strong internal controls for cash flow clarity
Keeping accurate, detailed records and conducting regular audits
Reducing errors and improving accuracy with AP management tools
Timely Invoice Processing
Effective AP management means processing invoices in a timely manner. Preventing late payments ensures happy, satisfied supplier relationships and eliminates extra costs and penalties from past-due payments. Ensuring timely invoice processing requires creating clear processes with structured workflows to handle supplier payments so everything occurs effortlessly.
For instance, reminders and notifications for due dates help if you don't plan on paying invoices when they arrive. Debiting bill amounts from your ledger prevents overspending and creating cash flow issues if you don't pay invoices right away. Also, automating the process with AP management tools sends out payments on the correct dates automatically while improving record-keeping accuracy.
Accurate Record Keeping
AP strategies that leverage management tools help you keep accurate records. Documenting every transaction precisely ensures each stakeholder has a clear financial overview. This transparency also assists you during audits, so you know where your money goes due to improved expense tracking and budget management processes.
Using accounting software like QuickBooks Online (QBO) helps you manage accounts payable effectively while saving time. Regular updates ensure the software reflects every transaction and get you in the habit of logging expenses right away. Likewise, periodic records reviews also help you catch and correct errors before they show up on audits.
Leveraging Automation Tools
Using AP management tools that automate payment processes reduces error risks. Automation tools include software that streamlines invoice processing, with tech tools like Bill.com automatically sending PDF versions of invoices to QBO so you have information right where you need it. These tools provide added peace of mind by centralizing operations and keeping financial facets transparent and easily accessible.
Also, automating approval workflows and payment scheduling can increase overall efficiency and enable real-time tracking and reporting. Popular automation tools used successfully by wineries and CPG companies include software we've previously mentioned — QBO and Bill.com. Another contender, Ramp, brings AI to the table with options for every step of the supply process, from procurement to payment.
Top Tools for Accounts Payable Management
Manage accounts payable effectively — especially when you have international suppliers — by using the right AP management tools for wineries, specialty food and CPG companies. Automating complex processes keeps your books transparent and budget on track while also ensuring regulatory compliance. Explore the top automation tools and how they can optimize financial efficiency by streamlining AP systems.
AP Tool
Key Features
Pricing
Suitability
Bill.com
Automated invoice processing, approval workflows, and payment scheduling
Starts at $39 monthly per user
Excellent financial automation and workflow streamlining
Ramp
Automated expense reporting and bill payments plus real-time spending management
Free-to-use platform
Comprehensive spending management solution
Aion
Automated invoice processing, real-time payment tracking, custom user permissions to add employees or partners
Free “Essentials” tier to get started
Comprehensive and integrated finance platform that includes banking, AP, and more
Bill.com
This powerful tool simplifies AP management by automating payments. It automatically captures, processes, and sends invoices for approval using a customizable workflow that ensures proper review before payment.
This tool also lets you schedule payments via ACH, checks, and wire transfers for international suppliers. Starting at $39 monthly per user, Bill.com offers a cost-effective way for wineries and CPG companies to modernize their AP processes.
Ramp
This all-in-one accounts payable tool provides real-time management for expenses and payments. Ramp reports expenses while categorizing each one, reducing errors from manual entry. It also charts spending for better spending pattern recognition so you can quickly get a handle on issues.
A user-friendly interface allows effortless bill payments so you can easily control AP. This platform has an entirely free pricing model, making it a great option for newer wineries and specialty food companies that want to optimize their AP management.
Aion
Designed for businesses of all sizes, Aion is a specialized financial management solution that integrates seamlessly with other financial tools like QBO. The platform itself is a comprehensive tool that gives users the ability to automate invoicing, track expenses, and ensure that their accounting needs are centralized.
Aion’s pricing structure is flexible. A free “Essentials” tier allows two users access to built-in tools for managing business finance in the platform, while paid tiers provide access to custom permissions and more advanced features.
Strategies for Effective AP Management
Effective AP management requires staying on top of invoices and payments. Automating the process can help you save money, improve cash flow, and maintain strong vendor relationships.
For example, a mid-size winery implemented AP management strategies like the ones we discuss below and, in the process, reduced invoice processing time by 40%. This quick turnaround time on payments helped them save thousands with early payment discounts while improving their financial record-keeping.
Setting Up Approval Workflows
Streamlining invoice approval workflows reduces processing times and keeps payments aligned with company policies. Setting up these workflows ensures authorized employees review and approve invoices before payment to prevent errors and fraud.
When you set up approval workflows correctly, they route invoices to the correct personnel using complex logic like "IF => THEN" statements based on specific vendors or invoice amounts. This minimizes manual entry for improved accuracy and payment speed.
When setting up approval workflows, these tips boost their effectiveness.
Define clear criteria. Outline how you want invoices routed via factors like vendors and amounts.
Use AP automation tools. Automate and manage workflows with top-notch AP management tools such as Bill.com and Ramp.
Perform periodic reviews. Maintain efficiency and accuracy with regular reviews and adjustments.
Regular AP Audits
Identify errors and discrepancies quickly by performing regular AP audits. These audits bolster the accuracy and integrity of financial reporting, ensuring accurate payment records. Regular audits also help you spot and fix minor issues before they become big problems while ensuring compliance with financial regulations and internal company policies.
Creating a checklist for audit tasks also helps you tick off all the boxes when reviewing your AP processes. Conduct effective AP audits by using these tips.
Schedule regular audits. Perform scheduled audits to keep financial records accurate and up to date.
Use AP audit tools. Use tools like Bill.com and Ramp to automate the audit process.
Review account aging. Add Xennet to the mix to review AP aging so payments don't slip through the cracks.
Optimizing Accounts Payable Management for Success
When you manage accounts payable effectively, you increase your winery or CPG business' chances of financial stability and success. Proper AP management also improves your cash flow by providing transparency in spending and keeping suppliers and vendors happy with timely payments. When you need help implementing the right tools and strategies for your company, the Balanced Business Group assists you with personalized services with an industry-specific twist. Find out more about what we can do for you by contacting BBG today.
