Since the start of the 11th century, Accounts Payable (AP) has been used for calculating business expenses in the double-entry accounting system. For most companies, the process for managing AP is mostly paper-based. But with the help of technology and the ability to streamline data input, invoices and payment processing, you can now turn the AP function from a cost centre into a revenue generator. Especially for small businesses, where managing AP can be extremely manual, labor intensive and inefficient, Business Finance magazine estimates AP automation can save an average of 130 HKD on processing costs per invoice.

Automate accounts payable so it can help generate more revenue for your business

Your accounting staff will spend the majority of its time on manual data-entry or processing paper - creating invoices, sending checks, and chasing up late payments. Atradius estimates that more than 45% of B2B invoices were paid late in 2018 and uncollectible receivables in Hong Kong remain some of the highest in Asia Pacific.

In the next few weeks, Reap will be launching scheduled payments so you and your finance team can automate the AP process, reduce the inevitable errors related to manual entry and ultimately elevate your business performance.

1. Get early payment discounts

By increasing the speed of managing AP, you have more leverage to potentially access or negotiate a discount for earlier payments. Contact your suppliers and see if you paid invoice on receipt, would that get you a discount. In most scenarios, you can negotiate some discount, because they would obviously like to get paid sooner than later even at 1 - 2%, these discounts can add up, especially during times of increasing competition and thinning margins. With Reap, you are also able to get additional air miles and cash back associated with larger supplier payments to further increase the value of managing AP.

2. Reduce late payments and errors

When AP management is done manually, there is a higher risk of data-entry errors and delays. Have you ever had conversations with your supplier where you had to call them to track down payment information? Your accounting team would have to spend an entire day to send emails, sort through files to figure out information related to the invoice or the payment process. This process is highly time consuming and can negatively affect team productivity and morale. Most importantly, late payments may affect your reputation with suppliers.

Your business should set up a streamlined payment process as soon as you receive an invoice (ideally in real-time) so you can track all invoices as it goes through the AP process. This will inevitably prevent damages in the form of late fees and severed supplier relationships.

3. Improve cash management

Previously, we wrote about the importance of cash flow management for small businesses.

Automating AP should be a key focus for you and your business if you want to manage cash flow effectively. A streamlined AP system speeds up processing and gives you better insights into where your cash is going. As you get new invoices, you should be able to track every change on the invoice (all the from issuance to marking it as paid) and these changes should be searchable at a later time.

4. Scale employee productivity

Your accounting team (internal or outsourced) are often swamped with work to keep your books in check. They need to input invoice information, process invoices, handle edge cases and changes in expectations, coordinate with supplies, to name a few. AP Automation reduces this manual process so you can save on billable hours and enable your employees to focus on other higher leverage tasks. 

Going forward, Reap will be launching scheduled payments where you would be able to set (and hopefully forget) expenses and payables that you have to make on a regular basis. We hope this will help streamline your AP process so you can transform your AP function into a revenue generator.

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