Accounts payable management: 7 practices to improve productivity

Less than 40% of businesses survive their first five years. Controlling accounts payable can help avoid this statistic, as this tool is a key element in ensuring the financial stability of any enterprise, regardless of size.

Ultimately, with this strategy, it's possible to understand and organize all of a company's expenses, avoiding default or the accumulation of liabilities beyond the business's financial capacity.

In this content, you will understand how this financial management tool works and learn best practices to increase productivity and efficiency in the sector.

Enjoy reading!

What is accounts payable control?

To achieve the main objective of business activity (profit), it is necessary to invest in space, raw materials, employees, tools, etc.

We know that investing generates costs for the business, and these costs, when not managed correctly, can snowball and hinder the company's growth, potentially even leading to bankruptcy.  

Therefore, to avoid future cash flow problems in your business, it is essential to implement accounts payable control. 

This strategy aims to organize, manage, and record the payment of all company bills , avoiding delays, fines, and interest.

What is the difference between accounts payable and accounts receivable?

The accounts payable control should include all expenses necessary for the company to carry out its activities. 

In turn, accounts receivable control should include all revenue that enters the company's cash flow .

Furthermore, it is essential to implement a strategy that aims to manage both assets and liabilities — that is, controlling accounts payable and accounts receivable. 

How to manage accounts payable? 7 practical tips

1. Separate your personal finances from your business finances

The first step to a successful business venture is separating finances, even in micro and small businesses.

With this strategy, you avoid using business income for personal expenses. Furthermore, this separation also prevents the opposite: using personal resources to meet company obligations.

So, the first (and fundamental) practical tip is to use a bank account exclusively for your business , directing all income to it!

2. Centralize account control

Does your company use multiple spreadsheets or notebooks for financial management? If so, you should abandon this strategy and centralize control in one place.

This will make it easier to organize and track expenses for a given month or period, as well as the due date for each obligation.

We also recommend opting for a smart financial organization module with cloud storage, allowing you to access your accounts payable control spreadsheet from anywhere, requiring only an internet connection.

3. Record all transactions

All expenses must be recorded , regardless of their value. This practice not only ensures efficient financial management, but also the success of the entire company.

Ultimately, the finance sector is related (directly or indirectly) to all departments of a business. 

And when its management becomes inefficient, it ends up negatively influencing various sectors and activities, for example: cash flow , inventory control, results measurement, among others.

Therefore, always record all transactions — whether their value is R$ 30.00 or R$ 3,000.00 — avoiding surprises and late payments at the end of the month.

4. Monitor cash flow

Cash flow is used to manage a company's payments and receipts, and is a fundamental tool for controlling accounts payable , as it provides reports on all costs.

To ensure its efficiency, in addition to implementing this tool, it is also necessary to monitor it periodically, tracking its records and verifying the flow of money.

This makes it easier to identify all of a company's expenses during a given period, as well as any financial gaps—which should be filled as quickly as possible.

5. Invest in automation

Does your business's finance department utilize any technology that offers greater speed and accuracy to its operations? 

Human errors can cause significant losses to a company, jeopardizing its operations and, consequently, its financial health.

Tools that directly contribute to accounts payable control or, indirectly, for example, to supplier management , help enable the finance department to operate at a high level and deliver the expected results.

Not to mention that, by investing in automation, your company ensures greater employee productivity , allowing them to focus their energy on other activities that contribute to business growth.

6. Do not use accounts receivable as collateral

Sales made with a credit card are not always debited immediately. In fact, the vast majority of institutions take up to 30 days to release the credit.

Therefore, do not consider this money as part of your available assets, especially when taking on new financial commitments, since unforeseen events can occur, preventing your company from meeting these obligations.

If necessary, it is also possible to resort to receivables financing , a resource that debits this outstanding credit before the due date and has a reduced rate when compared to a conventional loan or other forms of credit .

7. Efficient supplier management

The secret to achieving efficiency in supplier management is automating this sector with intelligent software.

Thus, all information and process flows will be gathered in one place, automatically and intelligently, allowing practical and quick access to this data by both parties.

Read also:

Supplier payments: how to negotiate new deadlines?

Get to know Sky.Simple

With Sky.Simple , it's possible to connect your system to a layer of financial services and modernize access to credit, automating your accounts payable department in a simple, agile, and economical way.

In addition, your company will benefit from advantages such as:

• Control over the securities that are released for early payment;
• Advance payments to your suppliers, with highly competitive rates, regardless of the size of your business;
• Credit to the supplier's account within 6 business hours.

Learn more about how Sky.Simple works! Click here and talk to one of our specialists!

Written by Skyone