If you are a business owner who is deeply immersed in the daily functioning of your business, there are probably important areas of running your business that don’t get your full attention. Not that you don’t want to give those areas attention; you know they are crucial. What ends up happening when you turn your attention away from one area to handle another? Sometimes you end up being reactive and not proactive in the management of your business.
Being reactive is what most of us are when we first start out. It’s about putting out fires (hopefully not literal ones!) and keeping the costs down as much as possible. You may be thinking that doing things yourself is one way to keep costs down, and it is. But you can only spread yourself so thin before things start to fall through the cracks. The invoices are missed, deliveries are held up because an invoice is due, you have to run down to the gas company to pay your bill because you forgot and they are about to shut off the power. Hopefully that doesn’t happen to you. And you certainly can’t move forward in any proactive way when these things are happening all the time.
When it comes to paying bills and managing costs you want to:
- get your bills paid on time and manage your cashflow
- minimize the time-suck that is data entry
- be able to see how what you are spending compares to your revenue
In this wonderful age of technology and the internet, a few really powerful solutions have been developed to help you with this. A few years ago I was introduced to an early player in this field of AP management, bill.com. It eliminated the hassle of filing (one of my pain points…HATE IT…such a waste of time), it helped with managing payments and approvals, integrated well with the accounting system. But I still had to code the invoices and it didn’t have the ability to create any sort of useful report from the information.Embed from Getty Images
A few weeks ago, I was introduced to another AP management solution that has been developed exclusively for restaurants. Its called Sourcery and one of the developers, Adam Ferris, led me through a demo. Restaurants present a whole different beast when it comes to vendor management. We are highly transactional. And the product we purchase today will most likely be sold within the next day or so. You need to know that the product you bought today is being paid for with dollars you make in the next few days. Sourcery has this reports page that allows you to input a sales number for the week, and it gives you, based on your invoices, your food spend for the week. Then it breaks it down by category so you can see how much you’ve spent on meat, produce, etc. as a percentage of revenue. It’s great to be able to bring sales information into the accounts payable equation and that is just one of the things I like about Sourcery.
Another thing that is really attractive: they input and code the invoices for you.They function as your AP manager! . After sending the invoices to Sourcery, they appear on your online account already coded. You still can edit the way the invoices are coded, but essentially this frees you up to do other things. You also can set the system up to pay invoices when they are due or have more control over when the payments go out.
In any case, it is still important to monitor cash flow…bill.com has a cash flow functionality as it connects with your bank to upload deposits so it tells the system how much money you have to spend on paying bills. Sourcery tallies your payment batch in a field on the top of the screen, so you need to know how much you want to pay out.
Accounts Payable management systems make so much sense for the small business owner. They function as a partner in your business. They must have great customer service because you have choices.
It is also my firm belief that keeping certain functions separate from your accounting system makes sense. Your accounting system, I believe, should be for producing financials. By separating the operational pieces, you are technically creating different departments that can be run by experts. And these AP management solutions are like separate departments of your business.