Accounts payable (AP) is when a company makes purchases from a vendor on credit that needs to be paid. Since accounts payable are a form of debt, it’s shown as a liability on a company’s balance sheet under short-term (or current) liabilities.
When managed poorly, accounts payable can affect more than just the credit line of a company. Recorded as a debit, it must be paid off within a given period to avoid default.
Why is Accounts Payable Important?
The short answer? Cashflow. Accounts payable and accounts receivable are two key factors that can make or break a business as it affects the total amount of money being transferred in and out of a business.
Your business should always be aware of how much it owes to other businesses. Maintaining a positive cash flow thus becomes integral in keeping your business afloat, hence the importance of the accounts payable process.
The Problem With Accounts Payable Process
If it’s so important, why is the accounts payable process so difficult for businesses and accounting firms? It comes down to three main process inefficiencies:
- Too much paper.
- Double data entry.
The typical accounts payable workflow goes something like this:
- You receive a bill that needs to be filed until you’re ready to pay it. This creates that dreadful stack of paper on your desk or in your filing cabinet that you’ve been trying to avoid.
- When it’s finally time to pay the bills, you sift through the never ending pile.
- You finally find the bill! Now it’s time to get the envelope and check ready, and route it to the right approver.
- Your approver takes a look at the bill, and has some changes he’d like to make. Now you have to go back to your vendor and ask for an updated bill.
- You enter the updated bill into your reports, and then again into your accounting software, a tedious and time consuming task.
- Now it needs to be routed it to your approver, again, but he’s out of town for the next three days! The bill is going to be late. Now what do you do?
Solving the Problem with Bill.com
There’s no denying the myriad of problems that comes with traditional AP workflows. How do successful businesses solve these issues? Enter: automated accounts payable with Bill.com. Our AP automation process helps businesses spend 50% less time on business bill pay in just four easy steps.
1. Create a bill
With accounting automation software like Bill.com, you’re able to streamline your entire workflow from end to end. Bills can be emailed to your digital inbox using your Bill.com email, dragged and dropped for your desktop, or faxed. Once a bill is uploaded to your inbox, it’s easy to enter and store, making it easy for you to search and find bills that are due.
When it’s time to pay a bill, your approver will receive an automatic notification to review it. If your approver has comments or feedback, it’s captured directly on the bill so your vendor will know immediately. With easy communication to vendors, approvers, and staff, any questions or changes regarding the bill can be answered quickly without delaying payment.
Our mobile app ensures that your approvers can stay up-to-date and never be out of reach when you have an important bill to pay. They’ll receive a notification to their mobile device and can approve with just one click.
No more extraneous errands and trips to the post office to mail your bills. With Bill.com you can pay your vendor via ACH, or if your vendor prefers paper checks, we’ll automatically print and mail those for you. We even have the option to schedule recurring payments!
We work with top accounting softwares like QuickBooks, Netsuite, Xero, and Sage Intacct to update your books once payments are made to eliminate double data entry. All documents are stored and easily searchable, so you’re always audit ready.
Looking to cut time spent on your accounts payable process by 50%? Get started with a 30-day, risk-free trial.