A new year brings about new opportunities for business, and with it accounts payable departments should consider new ways to maximize their cash flow. But what are the best methods to prevent errors such as duplicate payments? According to Tim Berry of Entrepreneur magazine, one first step is to ensure that the accounts receivable department and all sources of funds directed to payments are up-to-date.
Within that pool of information, spending and payments should be classified into clearly discernible categories that can be transferable to the AP department. AP departments should also be prepared for payments and never left in situations where they are scrambling for funding or resources, Berry details.
Additionally, companies should streamline what Berry calls the "collection days." He states that there should never be a disconnect in the chain that links payment days, collection days and inventory turnover.
The many facets of cash flow management can act as the lubricant that keeps the wheels of a company spinning. To ensure profitability in 2011, companies should test their AP departments to see if these practices are currently in operation.