The basic purchase to pay cycle can be represented as this image below:
Managing the purchase to pay cycle effectively will help you improve your working capital position. These are some of the things you can do to improve your cash cycle:
- Commit to purchases and delivery dates that match your real requirements. Don’t schedule deliveries too early.
- Record inventory receipts as soon as they arrive so your inventory records are always up to date, and you’re gathering accurate delivery statistics for your vendors.
- Record vendors’ invoices accurately for amounts and payment terms
- Ensure that you have sufficient controls to avoid duplicate payments and unauthorized payments
- Monitor your outstanding payables to make sure you’re taking advantage of payment discounts, not paying too early, and paying accurately to maintain good relationships with your vendors
- Control check stock and other payment delivery methods to ensure all payments are authorized
- Make regular and timely payments to match your business rules and facilitate the quick review and processing of payments
A well integrated ERP cloud system can help you meet these guidelines by coordinating operations, inventory, purchasing, financial control, and financial reporting functions. These are some of the things that will improve your cash cycle and working capital position.
This set of videos shows how you can use Dynamics GP to improve your cash cycle: http://youtu.be/lZiItcJkGYI