A company’s account payable (AP) operations could easily have a major impact on its overall success. What that means is that businesses should be following best business practices if they’re going to make their mark on the business world and continue staying ahead.
Despite we all know about the importance of paying bills on time, it’s quite common for entrepreneurs and business owners to find they are dealing with angry calls from vendors because of an overdue invoice payment. They also often receive emails and other written threats from vendors.
Step.1 Verify the invoice
Before pushing through the payment, business owners should consider that it might NOT be their own fault since, in some cases, it’s an error on the supplier’s end.
Perhaps the vendor has improper accounting records. It is just as plausible an explanation as the one where your accounting department is at fault for not making that particular payment in a timely manner.
Often, the threatening vendor might be pretty forceful. It is important to consider that they might not have it all together on their end. It’s imperative to slow down and resist the urge to panic. Don’t push the invoice payment through too quickly because it can negatively affect you, your AP team, and your entire company. It can cause elevated stress levels for everyone involved when the demands from the vendor include an invoice that might not be valid.
Step.2 Let your accounting process play out
Invoices can come in that are actually duplicates or have incorrect accounts receivable information. Maybe the amount or the quantity is completely different from what the company and the vendor originally agreed upon. While those are all things that a well-designed accounts payable system should catch, if an invoice is pushed through the system by an angry vendor, then the checks and balances of the AP system get skipped or bypassed. This could cause things like invoice discrepancies to get missed.
If you have a proper accounting process, you could rely on that system working and be able to reconcile the issue. It should also ensure that whatever is paid to the vendor is exactly what is supposed to be paid. In the event that you receive threatening calls or emails and the vendor starts coming down hard on your accounting department, causing them to forcefully push the payment through, the result could be a mistake in your accounting process which causes you to doubt yourself.
Step.3 Deal with it
If the invoice turns out to be a valid one, don’t panic. The point is that slowing things down while taking a good long look into the company AP system/processes can lead you to identify whether or not the vendor’s demands are legit or not. Are their threats backed up by fact and is it true that they simply weren’t paid on time? If so, then it’s definitely important to get busy and process the payment as quickly as possible.
However, then it’s extremely important to investigate the AP system and AP processes to identify where it broke down, what happened and why, and which chain in the AP process is actually broken. Then, simply fixing the chain and fixing the process can ensure that the situation won’t ever happen again in the future.
In many ways, your accounting can benefit exponentially from implementing AP automation, E-invoicing, and Dynamic Discounting. For example, invoicing errors and misplaced threats on the part of a vendor could be nipped in the bud as soon as the invoice was submitted electronically to the AP department. The automated system would catch it immediately and eliminate any confusion, stress, or even over payments.
In general, it can eliminate late payments, prevent errors, and save a great deal of time and money. At DeepSky, we’re well acquainted with these processes and can help any business, whether a startup, small-medium sized, or well established, in just about any field of business to set up these systems.
Contact us today to get a quote.