Self-employed, SMEs, large companies... No matter the size of your organisation, the sector in which you operate or your turnover. From the day you started your business there is surely a concern that has accompanied you on a day-to-day basis: payment of suppliers. A constant worry for any company that, if not managed properly, can become a torment. How to deal with it? Let's try to find some keys to this.
What are vendor payments?
The The process by which we pay an amount of money equivalent to the value of a product or service that a natural or legal person has provided us with. That could be the definition of supplier payment. However, the concept encompasses much more: what platforms or channels are currently being used and how to take full advantage of them, deadlines to be taken into account, current legislation...
How to improve the supplier billing process
Every company or self-employed person needs suppliers. Without going any further, the Internet connection is nothing more than a payment to a supplier that we all have to face. Basic, yes, but the best proof that any company has to deal with this procedure. Obviously, paying suppliers becomes more complicated if your company is very large or if there are many external agents involved in your production and, consequently, in your financial controls. financial controls. How can you make it a more efficient process? By seeking to optimise resources and time with these three keys:
- Use services and applications from specialist e-invoicing companies such as easyap simplifies the process. providers such as easyap simplifies the process.
- The automation of steps The automation of steps in the payment of suppliers by means of computer programmes standardises this process with a view to replicating it in future procedures.
- Using these services reduces the manual tasks involved in supplier invoicing, saving man-hours and personnel.
In this sense, although the human factor can be a plus, how you manage it will be important when it comes to implementing an efficient supplier invoice process. Manual tasks are slower, so automating them will speed things up. However, it is not enough to it is not enough to hire and use an optimal erp or crm system. You will have to adapt it to your company and business characteristics or complement it with solutions that reduce manual work. In this way, you will be able to exploit the three advantages we have just listed to make payments to your suppliers in the most optimised way.
What are the most common supplier invoice processes?
For larger companies or companies with high turnover, managing payments to suppliers can be a real headache. They are processes that require many hours and resources. Therefore, they will always be more agile and convenient if we automate them. This has been greatly helped by the arrival of companies, systems and applications that offer electronic invoicing services with which the savings in time and, in the long run, money are considerable.
However, most ERPs and accounting systems do not greatly reduce the workload of posting an invoice. There are many remaining manual tasks that, if not eliminated, limit productivity. On average, an accountant posts 10,000 invoices per year. Automating the following tasks will be a boost to the process.
- Data Entry, manual capture of invoice information takes 35% of the total time spent on posting. Processes such as OCR and/or electronic invoicing will be of great help.
- Electronic approval, to reduce the time spent and allow the process to be delocalised and dispense with physical documentation.
- Incident resolution, procedural and oriented towards each participant collaborating in their areas of knowledge.
- Online supplier information, the use of a supplier portal improves the relationship with suppliers and reduces the workload of information requests and payment.
Ultimately, how you process supplier invoices depends on you and what is optimal for you. However, the higher the volume of business and the more suppliers you work with, the more the use of anautomated system becomes a basic requirement. workflow of invoices Payment terms are also an important point, which we will discuss below.
Deadlines for payment to external companies
Balancing the books is vital for every business. Therein lies the relevance of a good turnover, where the cost of the companies to which we are creditors plays a fundamental role. Money and time are resources that we have to make the most of. For this reason, it will be essential to to make an optimised supplier payment schedule optimised, taking into account both deadlines and average payment periods.
Therefore, we recommend that you plan your purchases and payments in detail, as you will have greater control over your financial health. Along these lines, it is advisable to agree on supplier payment days in advance, which will allow you to automate payments and make your invoicing process much more convenient.
What is the Average Payment Period?
And when it comes to good planning and reaching good payment agreements with suppliers, a key concept is the Average Payment Period (APP). This is an indicator that will give us an idea of the image we offer as a creditor when it comes to paying outstanding invoices. The formula for calculating the average supplier payment period is:
PMP = (Average Purchases Payable / Total Purchases) x 365
The result we obtain will be the average number of days it takes us to manage payments to suppliers. Thus, we will know how we finance our purchases, which is very useful for us both in terms of offering a financially healthy image to external companies and guaranteeing good commercial agreements.
Legal issues in the payment of suppliers
On the other hand, regulation has been constantly adapting and developing. Today, there is not only a single supplier payment law, but the invoicing of commercial transactions between companies falls within a very broad legal framework. This includes official and general standards such as the following:
- Any commercial transaction must be covered by an invoice or similar or similar payment document, whether it is an electronic or conventional invoice.
- Suppliers are obliged to provide the customer with the invoice within a maximum period of 30 days, counting from the date on which the product or service was provided.
- No agreement may set a deadline longer than 60 calendar days for the payment of the invoice. for the payment of the invoice.
- If there are trial periods for the products or services set out in the contract, the customer must approve or reject within 30 days of the contract date. In turn, the date for payment to the supplier after the trial shall also be 30 calendar days after the order has been approved.
As mentioned in one of the points, agreements can be extended by mutual agreement, as long as they do not exceed 60 days. Even so, everything is more detailed in the different laws that regulate invoicing between companies.
However, we must decouple the supplier payment period from the invoice process; the payment period must be adapted to the needs of the business and not be conditioned by a deficient and slow invoice process. "An invoice process within hours allows for visibility and cash flow forecasting for months".
Given the complexity of the legal world and, for many, the management of invoicing processes, what better than to let yourself be guided? For this reason, and in conclusion, we advise you to use the services of a good electronic invoicing system such as the one we offer you at easyap. It can be your best accounting tool, as it offers you convenience, simplicity, agility... and, above all, it will save you a lot of headaches with your electronic invoicing.
