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Accounts Payable

In: Business and Management

Submitted By martin2037
Words 565
Pages 3
Financial Benefits of an Automated Accounts Payable System for Business
While businesses have become bigger and more complex over time, there has been a lag in the harmonisation of financial systems over time especially the Accounts Payable. The complexity of business has been as a result of various factors such as mergers and acquisitions as well as cross-border trade which is affected by factors that include but not limited to different tax regulations, currency and the languages of instruction. This affects the Accounts Payable as it requires real time data especially with regard to a business’ suppliers and buyers for it to be effective.
Lack of an automated Accounts Payable system leads to inherent problems such as delayed payments to an organisation’s suppliers, while delaying payments to suppliers may in the short run appear beneficial to an organisation’s cash flows, it actually may lead to the organisation losing some early payment discounts from suppliers which would otherwise represent huge savings on the organisation’s part. Delayed payments also affect long-term relationships with the suppliers as cash flow issues on the part of the suppliers may lead to a cessation of important supplies to the organisation. This ultimately hurts the organisation’s performance.
Despite the disadvantages stated above, adoption of automated Accounts Payable has been slow even though recent trends suggest the prospects are changing, a majority of the organisations surveyed indicated their intentions of automating their invoicing systems (e-invoicing), this is according to a survey conducted by Ardent partners that indicates 41% of organisations intend to embrace business commerce networks that incorporate e-invoicing.
E-invoicing is a key component of an automated Accounts Payable, it results into a more efficient and cost effective way of handling finances which is a…...

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