Vendor management and accounts payable have more in common with each other than a large number of business owners may think. The ability to improve your accounts payable may have a positive impact on how your business interacts with vendors, and it could possibly save your company money.
Understanding the Link between Vendor Management and Accounts Payable
In a traditional setting, vendor management is under the purview of the procurement department. They are the ones who will interact with vendors, do contract negotiations, and pursue discount opportunities. However, the accounts payable process is vital in keeping vendor management on a positive track. It may benefit the entire organization. This is because, according to research, over 40 percent of companies pay at least 10 percent of their invoices late. Vendors may consider late payments to be disrespectful. Thus damaging the vendor management process. One reason a business may pay their vendors late is because of problems within their accounting department. Their accounting department may lack automation, it may have a slow internal process, or it may be prone to an administrative error.
Generally, most business owners would not accept their customers not paying them because of accounting issues. Similarly, your vendors may not accept excuses for poor performance because your accounting department is facing challenges. Here at Fusion CPA, we have financial advisers that are here to help you assess the performance of your accounting department and determine how its performance is impacting your bookkeeping, tax planning, and accounts payable. These areas typically affect your vendor management.
Additional Considerations: Improving Your Company's Supply-Chain
Vendors are usually essential to the success of a large number of companies. They provide the products, allowing businesses to provide their offering to the end customers. An inefficient accounts payable process that leads to late vendor payments may cause the loss of key vendors. When vendors are paid promptly, they may return the favor by delivering goods swiftly and may be more inclined to offer discount opportunities.
Using Accounts Payable As a Tool for Successful Vendor Management
Bookkeeping and accounting might be improved by having a digital solution in place, such as QuickBooks Online. This usually makes it easier for accounts payable to provide other departments, including procurement and management, with the data intelligence they need to improve vendor management. For example, accounts payable might help your accountant by identifying when late payments, bottlenecks, and other processes occur that are slowing down vendor payments. Efficient accounts payable processes may provide a procurement organization the tools needed to identify vendors that may not be applying contract terms or vendors that might need a little extra care to help them maintain a healthy relationship with your firm. Digital accounts payable solutions may include the tools that allow your CPA to notify vendors of the status of their outstanding invoices. By streamlining the accounts payable process, there is a high possibility that vendors will get paid on time. This might improve vendor management and may strengthen your supply chain. Vendors may prioritize your business if they know that they can count on you to pay them on time.
Strategic Advice on Vendor Management from Financial Advisers
At Fusion CPA we offer CFO business advisory. We do more than simple bookkeeping, tax planning, and accounting. Our goal is to partner with you to help you maximize your cash flow and profitability. We know that you may have goals for future growth. Our team of experienced accountants is here to help you examine your current financial situation and suggest tailored financial and tax planning strategies designed to help you make your goals a reality. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
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