Payables management is concerned with paying every invoice on time or talking with vendors that cannot be paid on time to work out a compromise. To ensure that limited money is used correctly, the most pressing bills should be paid quickly. If there is not enough money but there are many invoices that need to be paid, then one tip for payables management is to know when to seek a loan or credit. Money typically is in limited supply for most businesses, so it may be best to transfer money on the last day to keep the money supply open. Automated systems may be of use with payables management, especially if there regularly are hundreds of invoices.
Most bills in the payables department can be prioritized; for example, income tax should be a high priority, while smaller bills can be given lower priority. If the business does not have much money, then a tip for payables management is to select what bills are paid on time and what bills will be paid late. Top-priority bills should be paid as soon as possible, and employees should talk with low-priority vendors or establishments to explain the situation and work out a compromise; otherwise, those vendors may refuse to continue working with the business.
Sometimes bills cannot be properly prioritized, because they are all high-priority. If this happens and there is not enough money to pay them all, then a tip for payables management is to know when to seek extra money. This can be in the form of loans or credit. It typically is best to avoid this, because it incurs another cost, but it may be necessary.
Having a large pool of money is typically good for a business, because it may need it for unexpected costs. To keep this pool as large as possible, the payables management team should authorize payments on the last day possible to be considered paid on time. This can be done through electronic transfer so the payables team can be sure the payment is sent and received quickly.
Large businesses may have hundreds or thousands of invoices that need to be paid monthly, and this can be difficult for the payables department to keep up with manually. One way to make work easier is to use automated payment software. This helps keep track of when payments are required, fills in information for paying the invoice and typically moves much faster than a human worker. Smaller businesses may not require an automated system, especially if there are just a few invoices each month.
