Businesses need to manage their finances so that different components like acquisition, allocation and management integrate to catalyze financial growth and achieve the organization’s prime objective. Strategic financial management involves using various financial tools and techniques to develop robust strategies and implement those strategies to meet the desired goal.
It is necessary to increase the market value of the companies, thereby maximizing the profit margins for the respective shareholders. It involves a sequence of steps such as setting a primary goal, analyzing the available resources, identifying the loopholes and tracking the difference between the allocated and the actual budget if they differ. Most of the time, when companies discover that the payables exceed the receivables, there needs to be something fixed with the strategic planning of the business. Let us understand what a payable account is and how we can manage it.
What are payable accounts?
You may have a wrong idea if you believe that accounts payable refers to the amount you must pay to all your vendors and suppliers for whatever raw materials, services or consultations they provide. This payable amount is not just burning a hole in the business owner’s pockets. Still, if managed effectively and strategically, this can promote cost-cutting and time-saving and ultimately contribute to the bottom-line performance.
Do you know the ways to manage your payable accounts strategically?
If your answer is NO, go through the details mentioned below to understand how you can increase the revenue of your business by utilizing the funds payable process seamlessly.
1. Build a strong relationship with a group of suppliers:
Instead of switching to multiple suppliers in search of better deals and bargains. It is always better to stick to a limited circle of suppliers. Once these vendors and suppliers start trusting their clients, they frequently give discounts and offers out of courtesy. Business owners and suppliers enjoy higher trust and security when they deliver the best product and service to their regular customers.
2. Integrate automated systems to improve the purchase process:
The manual method of maintaining all the financial records is becoming outdated because it requires immense amounts of brain work and time by the employees. That is why it is the need of the hour to integrate software-based management systems. All the buying, selling, and Payment Service Provider transaction details are safely stored in a single database. All these data are auditable, saving businesses a lot of time and money as there isn’t a scope for fraudulent transactions.
3. Synchronize the accounts payable and receivable:
If payable accounts are in sync with the receivables, it helps business owners track their cash flow properly. At any given time, they are aware of the funds’ availability, and without any credit obligation, they are free to make decisions involving capital growth.
A strategically aligned system of maintaining the payable and receivable accounts also creates a positive image of the organization from the banking perspective. Based on this, the banking partners may provide a profound line of credit, overdraft protection, money market accounts, etc.