Accounts payable management is closely tied to cash flow management and can require forecasting as well as day-to-day oversight
Organizations vary widely in their accounts payable needs, depending on how their procurement flow affects overall cash flow and fits into their particular business cycle. A professional firm, for example, will need little oversight of their payables, while a manufacturing firm will often require quite detailed forecasting and daily management to ensure cash flow is adequate to the firm’s needs.
A comprehensive assessment of an organization’s accounts payable needs is the first step in developing a good accounts payable management strategy. We look at how the procurement flow affects cash flow and its impact from an operational perspective. This process can be quite involved, particularly when tied to inventory handling and tracking requirements and other complexities that exist in certain types of operations. A thorough assessment is beneficial in that it will lead to more effective processes which will require fewer tweaks and updates down the line. Once the procurement requirements are identified, cash flow projections are prepared, if necessary, to estimate the cash required to satisfy those needs, and in what time period. The results of these assessments then help inform the procurement process and drive ordering and creation of the company’s payables.
Once supplier invoices have been received and recorded (part of the services we can provide), reporting of the payables to management is the next step. This is common to virtually all companies regardless of complexity. We generally prepare reports showing payables arranged by due date so management can decide which to pay and when to make the payments, but we can arrange the reporting in whatever way makes the most sense in a given situation. At that point either in-house staff will generate the payments or we will do it, depending on the needs of the particular organization.
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