These five accounts payable (AP) best practices for Year-End close will help you alleviate some of the pain points brought by 2020, and streamline your financial management going into 2021. By combining modern payment automation with these methodologies, your business will be able to optimize end of year accounting processes and focus on generating value in Q1.During the new normal brought on by COVID-19, it is more important than ever to leverage digital solutions to boost your efficiency and successfully close out AP processes before the new year.
Technology has enabled a mass migration to work from home (WFH) environments at unprecedented scale, illustrating just how much value cloud-hosted infrastructures can provide. Taking advantage of remote networks and automated tools will empower your accounts payable team to modernize operations and transform your vendor management to better adapt to change. Armed with a new level of visibility into your payment processes, you will quickly be able to reconcile inaccuracies, consolidate your accounting activities and chart out informative forecasting for 2021.
Here are five AP best practices to ensure a successful Year-End close for 2020:
1. Establish Efficient Communication and Vendor Management
Your first step in building AP best practice is to connect with your stakeholders, including managing your various vendors and finding ways to keep them informed and involved. Establishing clear, frequent and collaborative systems of communication will help build trust and transparency, as well as make it easier to discover new information and developments. The more seamless your key contact channels are, the faster you can process and approve invoices without having to devote additional bandwidth to handling unexpected paperwork.
Technology greatly streamlines your external communication by enabling you to consolidate touchpoints down to the most critical, saving time otherwise wasted. Traditional accounts payable methodologies and legacy systems introduce multiple, tedious hoops to jump through that require manual effort for each. Automating these payment workflows allows you to present optimized vendor-facing procedures and accelerate invoice processing while you close out Year-End items.
2. Work on Team Planning and Create Accounting Visibility
Your internal stakeholders must also be included in planning for end of year accounts payable processing, among which your finance team and involved business units should be prioritized. Invoice workflows – are frequently disrupted – if there is a lack of visibility and accountability throughout your accounting and operational touchpoints. To keep your AP personnel executing on Year-End tasks without interruption, you must be able to unite your business units and resources during Year-end close.
Best practice for collaboration means delivering insight and providing fast communication channels to all stakeholders, and the right solution will allow you to accomplish this in real-time. This is especially important for business continuity during the pandemic, as large remote workforces require anywhere, anytime access to continue contributing deliverables at a productive pace. With role-based permissions to maintain cybersecurity, users throughout your system will be able to seamlessly review and act on the appropriate documentation, sustaining the pace of your AP workflows.
3. Identify Year-End Roadblocks Early to Solve Discrepancies
Looking closely at your historical accounting data, current output and any persistent factors will help you build a more proactive Year-End best practice for resolving AP discrepancies. To facilitate this, you must be able to capture a clear and objective view into all of your vendor details, invoice information and previous annual workflows. Having the right level of insight delivered timely and consistently will allow employees to quickly identify erroneous or missed payments, and ensure you can resolve them before having to redirect resources and work hours.
Gaining this level of visibility into your operations requires condensing your accounts payable touchpoints to make it easier to track down inaccuracies, as well as reduce human error. Consolidating the journey to uncovering these discrepancies not only makes it easier to cut through tedious and redundant paperwork, but also develops a sustainable system of error identification in the future. Similarly, migrating these processes to a modern AP solution lets you take advantage of cloud-hosted databases for real-time review as well as electronic payment audit trails for faster traceback.
4. Ensure Data Accuracy and Streamline Reconciliation
Yet another drawback of traditional, paper-based accounts payable methodologies is the excess of filing and paper trails, which are difficult to wade through when tracking down individual information points. Your finance team will spend countless work hours trying to sift through records just to confirm individual activities and figures, let alone track down discrepancies. Migrating to automated payment processing and e-invoicing software will enable you to streamline how you identify and reconcile errors, and allow data accuracy throughout your Year-End processes.
The best AP solution is the one that remains flexible to your specific needs while still providing the means to quickly manage and process your information. Implementing a modern system will allow you to collect your invoices within a centralized hub as well as customize payment workflows to better handle deviations and prevent silos from obscuring visibility. This will provide the ability to streamline reconciliation month to month along with sanitizing data irregularities to the point where forecasting will improve in accuracy.
5. Implement AP Automation and Software Best Practice
Deploying AP automation can be considered a best practice in and of itself, but to capture the best ROI on your implementation, you must be able to process invoices seamlessly through your entire system. Efforts to improve user methodology should be augmented by integrated technology that allows data to flow uninterrupted between different modules without having to resort to endless manual recording. Choosing a modern accounts payable solution will have a tremendous impact, but what truly optimizes your processes is having software that “speaks” with your entire application stack.
Supported by the right customizations and partner, your payment automation system will greatly reduce the time and cost traditionally required by Year-End operations. By connecting to your ERP or accounting software, your AP module will have access to your business’s latest accounting data (especially when both are hosted in the cloud). Your finance team will be able to quickly and seamlessly call upon invoices and vendor information, and ensure payments are processed and approved in just a few clicks.
Learn More About These 5 AP Best Practices with AvidXchange
AP automation requires the right mix of user and technology best practice to streamline your Year-End activities and make preparing for Q1 as painless as possible. AvidXchange is a modern solution that helps you consolidate these payment processes while providing cybersecure access to your payment databases and consistent service for your vendor management.
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