🕒 Are You Paying Vendors Too Soon?

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Only a few days left in 2024! I hope you are taking advantage of these last days and making sure your plan is set and ready for the new year.

As we approach 2025, effective accounts payable (AP) and expense management are more critical than ever for small and medium-sized businesses (SMBs). Rising costs, evolving supplier expectations, and economic uncertainty mean businesses must focus on managing outflows efficiently. By refining your AP processes and implementing robust expense management strategies, you can improve cash flow, enhance vendor relationships, and position your business for long-term success.

Why Accounts Payable Matters

Accounts payable isn’t just about paying bills; it’s a cornerstone of financial stability. Poor AP practices can lead to late fees, strained supplier relationships, and cash flow shortages. On the other hand, a well-organized AP process helps you:

1. Optimize Cash Flow: Timely payments ensure you avoid penalties while taking advantage of early payment discounts. Timing is everything…

2. Build Vendor Trust: Consistent payments strengthen supplier relationships, which can result in better terms or priority service. Or when something comes up they are more likely to help you out!

3. Reduce Errors: Streamlined processes lower the risk of duplicate payments, missed invoices, or fraud.

As SMBs navigate tighter margins and economic fluctuations in 2025, refining AP workflows will provide a much-needed edge.

Steps to Strengthen AP Processes

1. Adopt Automation: Manual AP processes are time-consuming and prone to errors. Implementing AP software can streamline invoice approvals, reduce human error, and enhance tracking. This will hold the team accountable to run the process as you’ve set within your business.

2. Establish Clear Policies: Create a standardized process for handling invoices, approvals, and payments. This ensures consistency and avoids bottlenecks.

3. Optimize Payment Timing: Review supplier terms and align payments to optimize cash flow. For instance, schedule payments closer to due dates for standard terms but seize early payment discounts when your cash flow allows.

4. Monitor Vendor Performance: Evaluate supplier reliability and pricing regularly. If costs are increasing without justification, it might be time to negotiate or explore alternatives. Always be on the lookout for these changes, but don’t sacrifice quality for something cheaper…

5. Improve Communication: Build strong relationships with suppliers through regular communication. Address issues proactively and keep them informed of your payment schedules.

A HUGE thank you to our sponsor this week, Roku! I’m sure all of you have heard about Roku, but it’s great to see such large organizations taking part in our newsletter. We’re doing something right I’d say! Please check out the below!!

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Expense Management: A Critical Partner to AP

Expense management goes hand in hand with AP. Properly tracking and managing expenses allows you to:

1. Control Costs: Identifying and eliminating unnecessary spending frees up cash for other priorities. Does your team know about these limits, what they can purchase, what qualifies, etc.?

2. Improve Budgeting Accuracy: Consistent expense tracking provides the data needed for accurate forecasting and financial planning.

3. Increase Transparency: A clear view of expenses reduces the risk of fraud and helps you identify opportunities for savings.

Heading into 2025, SMBs should integrate expense management tools to ensure real-time visibility into spending and provide employees with user-friendly ways to submit expenses.

Take advantage of 50% off our Accounts Payable services now through 1/10/2025 by scheduling your free call now!

BG