In my previous blog I discussed new laws and guidelines that are tightening the rules on supplier payments in both the public and private sectors. In this blog I will concentrate on what you can do to ensure you remain on the right side of the law – and make your payables process more efficient in the bargain.
Invoice chaos hampers compliance
So, how easy is it to ensure that you comply with various laws, guidelines, policies and best practice in terms of prompt payment of your suppliers? Paying suppliers too soon means you’re potentially damaging your cash position. Paying them too late could incur the wrath of the law or damage your reputation.
The problem is that paper invoices might need to be reviewed or approved by several people. Their meandering journey around the offices presents a real and present danger. The more people touching each invoice, the more likely it is to be misplaced, lost beneath a stack of other ‘important’ papers.
The laws and ethics of accounts payable can be a threat to the business if you do not have control of the process. But if you manage payables in the right way you can comply with little effort.
There are a range of accounts payable software packages which promise the dream of capturing invoices and managing them in a more effective way. The only snag is the upfront costs. You have to pay for the software licence, as well as any new hardware required. It will need maintaining and then it will get out of date, so you have to invest in an upgrade and so on. Is this really what you’re in business to do?
Exploit the power of the cloud
There is another way. With cloud computing, software can be managed on remote servers with a dedicated team of IT professionals. It’s the business model that has taken Salesforce.com to more than $2 billion revenue in 2012, so it must be working for someone.
Companies using cloud computing to provide accounts payable services might manage thousands of businesses’ needs, which gives them the scale and resources unachievable with an internal process. Some cloud-based services on the market can accept both paper and electronic invoices, allow visibility and validation from anywhere as well as archiving old invoices for future analysis.
Cloud-based accounts payable services can also provide fully auditable paperless trails, both before and after payment, giving detailed visibility of spend commitments. They can also apply payment rules based on geography, captured in the contract, ensuring compliance with local and international finance regulations. Remember a Swiss supplier might be treated under entirely different rules to a firm a few miles over the border in France.
Treasure your reputation
Managing accounts payable in this way means that as well as lowering the effort in compliance, there are spin-off benefits including getting better prices, driving supplier efficiency and lowering internal friction.
And compliance is not just a legal issue. Businesses with a strong reputation for acting within the law are more credible in the marketplace, making it easier to raise finance and win business.
With international commerce becoming increasing complex, it’s best not to leave your company’s legal compliance and reputation in the hands of old-fashioned invoices. Lose them and you may be losing more than a bit of paper.