Businesses in all industries want to be more profitable using fewer resources. School boards aren’t any different. Making this mindset work means taking an in-depth look at all the processes you currently have in place and streamlining them to be more efficient, more accurate, and have fewer mistakes.
Only then can you free up funds for more working capital. For many industries, this means deviating from legacy systems.
Many organizations don’t give their accounts payable (AP) processes a second thought, even though this is the heartbeat of your cash flow. Experiencing regular challenges with your AP software can negatively affect your entire district.
If your school AP processes are outdated, you’re missing out on applying the best practices in your day-to-day operations. Updating your district’s accounts payable (AP) software will help you seamlessly forecast budgets and track spending, meaning more profit and success within your division.
The AP department isn’t usually a priority for school boards when changing or adapting different processes to gain working capital. But when you take a deeper look into different strategies that could optimize a working capital culture, AP is the place to start.
Some may think they’re maximizing their cash flow by delaying payments to suppliers as long as they can. But making suppliers wait does more harm than good and can lead to:
Submitting payment early to your suppliers could be helpful if they have early payment incentives or discounts. But sometimes that discount won’t outweigh keeping money on hand until the final deadline.
To successfully free up working capital, there must be a change in the processes being used and in the attitudes toward achieving them. This is where a collaborative approach between accounts payable, the purchasing department, and upper management can be beneficial. Essentially, the organization as a whole must take on a working capital culture.
And this involves more than just paying bills on time. There must be a change in company focus so that refining payment processes is recognized as being important. Only then can you free up money for growth.
Adopting a working capital culture throughout your district may not be easy, but the benefits will outweigh the challenges. Once you streamline your accounts payable process with cloud-based technology designed with schools in mind, you’ll see a change in your available cash flow. This is where you can fill any funding gaps and see an improved bottom line.
Expect to see many benefits when you improve your AP procedures:
If you’re using outdated AP processes, your supplier payments may get delayed. This can affect your quick payment discounts or having extended payment terms. There are many things that can lead to issues with your AP processes:
Edsembli supports the full Req-to-Check process, giving users a seamless AP experience across all touchpoints in the process.
Your school division’s AP needs don’t have to be complex. When choosing a financial platform, ensure that it improves AP functionality with modules that meet your specific requirements.
Follow these best practices to get your school district closer to your financial goals:
Centralizing accounts payable throughout your district keeps AP staff accountable by having to follow the same practices and procedures. This allows for easier and more accurate performance management
When procedures come with strict guides, people pay more attention to ensure they’re following the rules. This results in less errors and more control over processes and supplier contracts.
Electronic Data Interchange (EDI) is the way of the future. Automation allows you to communicate electronically with your suppliers and vendors, gaining you notable advantages and savings.
Automatically generate, validate, accept, approve, and track your PO’s all within the system.
Once you receive your order, the system will automatically pay the invoice. Vendors and suppliers appreciate automatic payments, so they offer discounts and rebates as an incentive for using EDI.
Make it known district wide that all purchases over a certain amount will need to be approved by specific personnel. Having control of purchases will stop frivolous buying and save money.
Using Edsembli’s expense claim management module, supervisors and board members can easily access expense claims, approve or deny them, and issue payment digitally. Notifications of management decisions are automatically sent to the purchasing employees.
When you streamline accounts payable system procedures it resolves bottlenecking during the handoff process between AP staff. This makes the entire accounts payable department more efficient, as the work flows at a more consistent pace.
Setting up portals for suppliers allows them to track order status, delivery timelines, and even possible shortages. Portals save time, improve the accuracy of orders, and reduce errors.
Of all the processes and procedures that take place within the AP department, there are many that, if reformed and enhanced, will increase working capital. Edsembli’s Tangible Capital Asset module can help you stay on top of regulatory requirements with full transparency of the capital invested in your projects.
Start with a list of preferred suppliers. Make sure all staff are aware of the list so they don’t just buy from anywhere. This will allow your purchasing manager to arrange special terms. There are 4 key steps you can take when negotiating terms with suppliers that will help increase your working capital:
Entering details of the negotiated contract correctly is crucial to all future AP processes. If entered wrong, your district could pay wrong prices and not meet payment deadlines. This has a snowball effect which could then void your eligibility for any discounts or incentives. It could even lead to service disruption. Here are 3 steps to prevent this from happening:
Mistakes from suppliers happen. To prevent incorrect invoicing and missed discounts wherever possible, do a regular review of your supplier contracts:
In order to manage accounts payable processes reliably, you must reconcile every invoice with its purchase order.
Without knowing where your cash is going, you won’t be able to free up cash flow for working capital.
The bigger your district, the more suppliers and buyers you likely have. It can be challenging keeping everyone in line with procedures if you don’t have a good AP plan in place:
Modernizing your invoice processing system is a sure way to free up cash flow. There are a few ways you can do this:
Having accurate reports and statements for current accounts payables is crucial when looking for workflow capital. Being able to choose when to take advantage of early payment discounts is just one example.
Reinforce how your team processes your accounting reports using these steps:
Getting tough with AP procedures, having clear processes, and following accurate ways of measuring can significantly improve your chances of freeing up cash flow and having more working capital.
Automated EDI technology makes AP processes easier and more accurate by cutting out potential for human error. Automated technology improves your relationships with suppliers, giving you more leverage when negotiating contract terms.
When a school district buys-in to a working capital culture, there’s only growth and success in their future. Book a demo today to see how Edsembli | FIN can set you up with cloud-based automated technology designed specifically for schools.
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