5 Tips for Conquering the Last Mile of Accounts Payable: Payments

5 Tips for Conquering the Last Mile of Accounts Payable - Payments

By Ernie Humphrey, CTP

The past few years have witnessed a growing attention being paid to accounts payable. This attention is warranted as accounts payable is often the most complex business process at companies of all sizes across all industries. Many companies have endeavored to mitigate expense processing costs and remove the inherent productivity drag across the enterprise that is associated with AP related inefficiencies. However, many companies still fail to pay enough attention to controlling how and when they pay suppliers, what I like to call “the last mile of accounts payable.”

Here are five tips to facilitate control over payment types and timing:

1. Visibility into the types and timing of all payments.

  • Payment types: checks, ACH, Wires, Card Payments      
  • Payment dates: compliance with payment terms, discounts available, discounts taken

2. Visibility into the reason for payment type selection.

  • Your preference
  • Customer preference
  • Specified in purchase order (PO)/invoice
  • Always pay this way for this vendor/No reason

3. Understand your actual costs of processing each payment type.

Payment processing costs can vary significantly by payment type.

4. Understand the payment preference of your suppliers.

Educate suppliers on the value of accepting certain payment types if certain types are of much lower cost to you. However, do not push card payments on your suppliers just for your benefit. Explain the cost and value to them and let them make an educated decision.

5. Invest in relationships with your suppliers.

The better relationships you have with suppliers the more opportunities you will have to optimize the timing of your payments and more influence you will have over the type of payment you send your suppliers.

Payments optimization means you have visibility into what you are doing now and why you are doing it, an understanding of what it costs your company to process payments and the cost and benefits related to when you make payments, investing in relationships with customers, and a commitment to delivering a frictionless accounts payable process from end to end.

Optimizing the value delivered by the accounts payable function means conquering the last mile of accounts payable, payments optimization. It is time to invest in your supplier relationships, impact your company’s bottom line, and in the process, impact the productivity of your AP team and the AR teams of your suppliers.

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