In the world of AP, not all bills are created equal. While some such as travel and entertainment or leases are very predictable, other payables are far more complex. Utility, waste, water and telecom bills have nuances that make it complicated to process, pay and track. Variations in bill timing, start and end date, thousands of different formats and levels of detail, not to mention the different ways to receive the bills such as through the mail, electronically, spreadsheets or via the web, make it difficult to manage the processing and payments. To add to this, the cost and usage amounts are rarely the same from month to month as they can have dependencies on weather, market pricing and unexpected operational changes. With these complex payables represented in the top three or four line items in a company’s operating expense, it’s imperative to master how they are managed.
Luckily, there are some tried and true ways to handle complex payables.
- Automate the data acquisition. With thousands of vendors to deal with, automating whatever processes you can will help to ensure that you receive the bill, or know if you didn’t.
- Capture the data at a detailed level. With approximately 6% of bills containing errors, but no PO to assist in matching costs, it’s critical to capture all usage and cost details, otherwise you could be leaving money on the table when it comes to auditing and optimizing these expenses.
- Understand the ins and outs of each type of payable. Expertise in areas like energy, water, waste and telecom are key to knowing if there are issues in billing or if there are opportunities to reduce costs.
- Track and plan carefully. Leverage all of the above to ensure that you are accruing these complex payables accurately each month. Create a budget that reflects how the usage and cost fluctuates during the year due to seasonal and market changes. Track how your monthly expenditures are comparing to your budget to see if you need to make any internal adjustments.
It’s not easy to accomplish all of the above in house. Resources and expertise to dedicate to this important expense line item are hard to come by. A good first step to driving savings from these unique and intricate bills? Understanding them. Join Ecova experts for “The Hidden Value of Complex Payables” webinar as we dive into the nuances and budgeting best practices.