How to Choose the Right Accounts Payable & Receivable Software?
All businesses need to carefully manage their relationships with suppliers and customers, and this is partly achieved through the use of efficient accounts payable and receivable platforms. Since no two businesses are the same, the choice of the right accounts payable and receivable software should be based on the following overriding factors:
Your Business Needs
While considering which software is best for your business, you need to first understand your business needs. Is your business a small scale, mid-sized or large enterprise? How bulky are your AP/AR processes? How often would you be needing the AP/AR software? And does your business do more of either accounts payable or receivable? Answering the above questions will help you make the right software choice.
Your Financial Capacity
In addition to understanding your business needs, you also need to understand your financial strength. AP/AR software vary in their prices, so whichever software you go for will be based on your financial capacity. Do you merely need software to make your accountant’s work more efficient? Or are you looking to have AI take over your entire AP/AR procedure? Answering these questions should be the starting point.
What Is Accounts Payable and Receivable Software?
Accounts payable and receivable software is a digital solution for handling payments related to customers and suppliers. They are designed to help businesses process AP/AR operations faster and more efficiently.
The fundamental function of AP/AR software is to automate accounting processes, thereby reducing the time businesses need to complete processes like invoicing and order processing. They also eliminate the costs and errors associated with manual AP/AR data entry and analysis. Hence, they spare businesses the negative consequences of manual and paper operations.
Some AP/AR software has features that efficiently replace the fundamental functions of accountants. In a nutshell, an AP/AR software does the job of an accountant 24/7, without a mind of its own, but according to users’ instructions.
Benefits of Accounts Payable and Receivable Software
While the use of accounts payable and receivable software does not eliminate the need for an accountant, there are still attractive benefits. Provided that you choose compatible software for your business, you stand to enjoy these overwhelming benefits whenever you use AP/AR software.
Reduced AP/AR Operation Costs
Consider how much you get to spend to purchase and maintain papers, printers and fax machines yearly. You’ll most likely exhaust your business profit on toners, file cabinets, and wages for administrative assistants when you can create, send and save an invoice without leaving your computer.
Do not forget that manual AP/AR processes will require you to pay for the storage space for those invoices and receipts. You’ll also exhaust your finances on call credit for communicating with the different departments and desks responsible for approving and sending invoices to customers.
Increased Cash Control
Automating your AP/AR operations gives you a better view of your cash flows, which, in turn, gives you greater control over your capital. It helps you understand what you owe and what you’re owed, allowing you to make profitable financial decisions.
This control also translates to helping you decide the most suitable time to complete your accounts payable processes to balance your cash flows. You won’t have to worry about not having enough cash for profitable investments, as most software predict when it is safe to complete payments.
Improved AP/AR Operations Efficiency
Handling AP/AR operations manually may be manageable for small businesses. However, if you have to deal with hundreds of invoices every week, manual processing may not be the way forward. You’ll have to steal a significant portion of your time processing invoices, figuring out which order belongs to which invoice, and further persuading customers to pay up what they owe.
But with AP/AR software, invoices can be automatically entered and forwarded to customers. These solutions also send automated emails and reminders to customers and equally facilitate payments via credit card and ACH payments to combat possible accounts receivable delays. And if you have to locate an invoice to complete a payment, AP/AR software sees to it that you never have to forage through piles of documents to do so.
Accounting errors can be costly for every business because omitting or including additional figures could result in huge financial consequences. And a consistent pattern of error-laden invoices, payments or transaction reconciliation can spoil the reputation of your business. On the other hand, automating your AP and AR operations reduces errors and inconsistencies during payments. You’ll also record reduced-orde mismatching and duplicate or erroneous invoices and payments.
Improved Time Management
AP/AR software cuts down the time required to complete processes like invoice creation, sending and approval. It also reduces the time required to match orders, reconcile payments and reach out to customers and vendors for payments.
Enhanced Customer Relationship
AP/AR software improves your business’s relationship with your customers by first enhancing your communication with them. With functional software, you can also create, send and receive emails, invoices and payments seamlessly. You can also log voice calls and save your communications for analysis at a later time.
Secondly, AP/AR software fosters customer relationships by eliminating the errors and delays that could mar your customers’ satisfaction. By automating order matching and invoice entry, these solutions go a long way to eliminate human errors associated with manual AP/AR operations. Add this automation to the efficient delivery of invoices to customers, and you’ll have customers completing their payments in time and coming for more of your products and services.
When you spend less time on accounting operations, you get to utilize those times for profit-making activities. You can also harness the insights and reports generated by your AP/AR software to foster strategic business decisions and actions. And when your customers are pleased with your payment procedure, it means more sales and increased revenue for your business.
Factors to Consider
Having known what your business stands to benefit from an AP/AR software, you should consider the following factors before choosing a software:
The aim of relegating most of your AP/AR operations to software is to increase speed and eliminate manual entry errors. Hence, in choosing an accounts payable and receivable software, go for solutions that can carry out the most intricate and challenging processes without the need for manual input.
Given that accounts payable and receivable operations are only a portion of your business’s accounting system, you need to be able to integrate your AP/AR software with other business solutions. Not only will this integration make accounting seamless and flexible, but it will also save you the consequences of improper accounts reconciliation.
By integrating your AP/AR software with your CRM, payment gateways, and inventory management system, you can further improve other business processes and your relationships with your customers.
Your accounting data is a very crucial component of your business. Any breach of your financial information could result in irreparable damages to your operations and reputation. Hence in your search for AP/AR software, look for solutions with enhanced data security. Two-step verifications, message encryption and secure document storage, should not be lacking in the security detail of your choice of software.
When selecting a suitable AP/AR software, also look for options with easy deployment. You wouldn’t want your employees stuck on trying to access the solution when you’ve got a tight payment deadline to meet.
Preferably, go for solutions with cloud storage to eliminate the need for heavy installations and servers. Mobile-friendly solutions should also fall into your list as they allow you to access your AP/AR data even while you’re on the go.
Undoubtedly, not every one of your employees should have access to every piece of data on your AP/AR software. Hence, choosing solutions that grant user permissions based on their roles will help keep sensitive data confidential and prevent unauthorized access to your systems.
Your AP/AR software choice should also depend on its cost as different software are priced differently. It would be best not to opt for solutions that will cost your business more than you can afford. It would help if you also considered the unique needs of your business before choosing an AP/AR software.
At every point in your business, you need to monitor and understand its status and performance. And getting an AP/AR software that can generate useful financial reports will help you stay ahead of your AP/AR processes.
Whichever solution you opt for should be easy to navigate. Using complex interfaces will only eat from your profit because you may need to train your staff on its usage. In addition, your employees can also make costly mistakes when they’re left to work with challenging software.
Accounts payable and receivable management is a key area for every business. It may seem like a huge feat to get everything figured out, especially for large businesses. Accounts payable and receivable software will help you stay ahead of things in your AP/AR department. In addition, your business will also get to relish its numerous benefits.
However, getting an AP/AR software isn’t the end of the road. You have to choose the right software for your business and not fall into the temptation of choosing the cheapest or most reviewed software you come across. By following the steps mentioned above, you should find the software that perfectly suits your business.