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Benefits of AP Procedures PDF Print E-mail
Written by Cecilia Chee, Singapore   
Monday, 03 October 2011 19:59

 

 

Benefits of Great Acccounts Payable Procedures

 

  • When managed well, you'll improve the working capital in your business, by reducing the amount of working capital financing you need to support sales credit granted to trade customers.

  • You obtain and establish business credit from new and potential suppliers in advance of when you really need it.

  • You never run out of essential supplies in times when you really need them because you don't have an open supply line due to the account being over it's credit limit (or frozen).

  • You're in an excellent negotiating position for obtaining price discounts and volume discounts (even early payment discounts) when you can demonstrate a track record of a well managed, well administered account. This will help you obtain an advantage over your competitors, and move you towards better returns on investment capital.

  • You'll have excellent working relationships with your suppliers enabling you to call upon them for exemplary credit references which you can use to obtain further favorable credit terms with other suppliers - giving you essential alternate supplier options, and more bargaining power.

  • As procedures are well documented, and communicated, no one is unclear about what "needs to be done" and reducing the likelihood of exceptional or extraordinary events that take up management time to solve and work around. You have a more efficient business.

  • Clear authority levels and expenditure mandates aid control, and help appropriate expenditure decisions to be made at the right level of the business. This improves net profit - by reducing unneccessary expenditures, and improves return on capital because appropriate considerations to investments are made at the right level of the business.

 

 

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Last Updated on Tuesday, 04 October 2011 12:34
 
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