Should You Treat Accounts Payable as a Cost Centre?

With the evolution of technology comes the increase in competition in the corporate world. As such, businesses have started investing in automation software to keep up with the trend. To streamline processes, they are getting tools that automate several functions. These include accounts payable and accounts receivable.

But, some think of accounts payable (AP) as a cost centre. They believe that while it costs money to run, it does not bring profit to an organization. This must be because its contributions to a company’s revenues are indirect. As such, cost centre managers like an accounting department try to keep their costs down.

So, here, you will know why you should not treat accounts payable as a cost centre. You even need to invest in good AP software to help you streamline this function further.

What is AP Software?

An accounts payable software is an essential tool for any finance department. Tons of paperwork often bombard accounting departments. To deal with this, they do the tracking, checking, and matching of documents manually. They take into account every cost and purchase made. Any wrong detail or information could cause a domino effect in the company.

Thus, introducing an automation system in an organization helps to streamline the process. It also helps to cut down risks from the manual handling of financial documents. When properly implemented, it could bring significant benefits to the company.

The Benefits of Having a Streamlined Accounts Payable Process

Streamlines the Process

Using an AP automation tool is the best way to speed up the process. This software could easily manage the process from invoicing to receiving.

This tool is handy when handling critical functions. These include invoice payments and approvals. Thus, it will help you avoid missing out on working with better vendors. It also helps avoid such adverse outcomes as vendor delays.

A better AP process will allow for more flexibility. As such, finding the best vendors can be more accessible for you. These could be smaller vendors who do better work and charge less. But, with a flawed AP process, you might lose on that opportunity.

Furthermore, a good AP process can simplify the tedious way of handling documents. This tool can create a good impact on the company’s reputation and productivity.

Promotes Transparency

Transparency is vital in any organization. When it comes to finances, you should never rely on someone’s word-of-mouth. Clear documentation and visibility of invoices, purchases, and payments help. With transparency and visibility, stakeholders can easily make informed and better decisions.

Improves Efficiency and Accuracy

An AP software is a surefire way to get rid of manual errors. You can use it to determine if there are some inconsistencies in the data. With its accuracy, your business as a whole will have a better process. Also, you can forge better relationships with your business partners, investors, and vendors.

Minimizes Cost

As mentioned above, you should not see accounts payable as a cost centre. Investing in a sound AP system helps companies to save time and energy. For example, instead of hiring one more accountant, you can get accounts payable automation software instead. It is a perfect way to save on recruitment costs. It is a paperless process, which means you are also helping the environment. Since it is all digital, you can share it with your team no matter where you are.

Enhances KPIs

The manual AP process makes it impossible to track Key Performance Indicators (KPIs). With an AP automation tool, you will be able to track and establish KPIs in real-time. It will also be simpler for you to manage and analyze them.

Wrapping Up

There are various accounts payable automation software out there. So, the secret is choosing the right tool that will work for your needs. It’s a matter of selecting the right vendor that can deliver results. Additionally, it is not all about how the tool is big, small, or expensive. It’s flexibility and efficiency that matter.

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