Dean Kaplan, president of The Kaplan Group
As a collection agent, I work with a lot of Accounts Payable (AP) departments. I can tell a lot about a company by how organized and efficient the AP department is. An efficient, and well-informed AP department can save the company time and money in late fees, interest payments, and collections calls. Here are 5 current trends your department needs to be on top of.
1.Work from home is here to stay.
Covid-19 forced all kinds of employees, from CEOs to administrative assistants to work from home. Many companies who previously resisted the trend now know it’s workable. Being able to work remotely increases staffing opportunities, and can save lost income from weather or other emergencies. However, the more manual a company’s AP processes are, the less able they are to work from home. If in order to issue payments, an AP staffer has to go into the office to pick up check stock and print the checks, drive them over to the CFO to sign them, and then mail them to vendors, that’s a problem. It’s a problem that could cost you money in late fees, or good will with vendors waiting payment. Automating these processes is going to become more and more important.
2.Digital transformation is accelerating.
The pandemic exposed problems with manual processes that people had been discussing for years. The importance of a smooth-running AP operations is obvious, as is the critical role that AP plays in business survival. The AP department has important financial information on cash flow, spending, outstanding liabilities and more. This is all important to departments like Finance, Procurement, and Accounting, as well as individual business units. This data is hard to access using paper-based processes, but digital automation lets the entire organization view and analyze the information
3.B2B payments are part of business strategy.
Companies are looking more closely at payment terms. The difference between net 30 and net 60 could great affect your cash flow. Costs can be reduced by negotiating for early payment discounts, cash discounts, or even simply paying on time. We always advise clients to include payment terms in their credit applications, so your AP team needs to be involved in reviewing applications and contracts.
4.Freelance workers are increasing.
Organizations are becoming more comfortable with both remote workers and freelancers. Along with the growing number of 1099’s, AP departments can expect an increase in numbers and types of invoices from freelancers. Paying freelancers on time is not just the right thing to do, it’s also good business. An annoyed freelancer tired of waiting for payment can simply move on to a new gig, and bad mouth the company to their network. As you increase the number of freelance workers, you can expect more scrutiny from the IRS. You can also expect more phone calls and emails from freelancers themselves. While an employee would never bother AP for a paycheck, a freelancer will. Good record keeping is essential.
Dean Kaplan is president of The Kaplan Group, a commercial collection agency specializing in large claims and international transactions. He has 35 years of manufacturing, international business leadership and customer service experience. Today, he provides business planning, training and consultation to a variety of global companies.
