Generally, the abbreviation AP in business means accounts payable. This is usually different than the accounts receivable department, though some smaller companies can successfully combine the two.
Accounts payable is an area to which you need to dedicate significant resources because the IRS will look at it closely when tax time comes around.
These days, you can set up automated AP services if you have the right software. Usually, that’s SaaS, or software as a service. You pay a monthly fee to use a particular suite with some different useful features.
The other option is to keep things on paper. Companies are getting away from that model more and more, though. In this article, we’ll give you five compelling reasons you should consider switching over to AP automation.
If you’re unsure how useful AP automation is, consider the lost or late invoice problem. If you’re still working with paper invoices, it’s easy to:
Losing an invoice sends a customer the wrong message. It tells them you’re not as professional as a similar company. With AP automation, this situation is virtually impossible.
Your business will be on more solid financial ground if you always know where every one of your invoices is. You can look them over at any time and notice analytics trends that should help you with budget allocation.
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There are all kinds of crises that can take place that might harm your business. You could have:
It is this type of disaster that will make you think twice about retaining your paper filing system, both in your accounts payable department and elsewhere.
When you look at how devastating this sort of thing can be, it makes automation in as many areas as possible a no-brainer.
Your workforce might need to recover if something like this happens, but your records will be secure and untouched.
There are likely going to be times when the IRS will need to look at your finances. In the past, before automation, that often meant a great deal of work on your part.
If you ever faced an audit because of some mistake you made, you’d have to come up with stacks and stacks of paper invoices to try and prove you were not doing anything underhanded.
With automated AP, things are so much easier and neater. You can track all the money that’s going out and account for every dollar. There should be no discrepancies, and if there are, you can track them down and account for them in much less time.
The IRS will appreciate this improved oversight, and you should be able to stay on good terms with them.
Gradually, more businesses are getting away from retaining physical locations. The pandemic has shown that many individuals can work from home, and remote work coupled with automation has been a hit with lots of companies.
If you automate your accounts payable along with as many of your other departments as possible, you might reach a point where you don’t need to rend or purchase office space at all.
Consider all the cash you could save that way. You can reallocate that money where it’s needed, like using it for aggressive social media efforts or foreign market expansion.
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Depending on which business you’re in, you may want or need to keep your accounts payable records for several years after they’re relevant. If you haven’t automated yet, that means paper files taking up space in some physical location.
Technology has rendered this system obsolete. When you automate, all those files go into the cloud. There, you can easily access them if you need them for some reason.
In certain niches, you have to retain your financial records to stay compliant with various governing bodies. If you automate, all of that is going to be so much easier and simpler.
The amount of money and headaches you can save with AP automation make this something you should look into immediately if you haven’t done so already. Several companies offer software suite options, so find the one that will fit you best.
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