If you are a business owner, ask yourself this question: how much time do you usually spend on managing your payables?
Meet John, who owns a stationery store that has just begun to take off. John just asked himself the same question, and realized that he’s been spending so much time on payables that he hardly has time for anything else. Things got tricky last year when John decided to add more products and include international brands in his stock, which led to a steady increase in the number of suppliers. Before that happened, he had time to spend reading up on entrepreneurship and marketing in order to expand his business, but now processing bills and managing payments has taken over everything.
When John started his store, he was managing his accounts payable with a few spreadsheets and an online banking portal. He didn’t see the value in putting more effort into his payables process. “Shouldn’t I just focus on expanding my business?” he thought. But as months passed, he noticed that paying attention to accounts payable had a direct impact on his business. He could only keep up with his budgeting when he had a clear picture of who to pay and when to pay them.
While spending time on accounts payable is important, the inefficiency of his process was eating away a huge chunk of his productivity. His spreadsheets weren’t connected to his banking portal, and checking his information for accuracy meant a lot of switching back and forth between multiple apps. It would be much easier for John, if he could have his banking and accounting records in a single place, and access his payment functions from within his accounting environment.
Contextual banking can help him do just that!
Accounting software and banks are now integrating to bridge the gap, so you can have your accounting and banking records in the same place. Apart from saving your time and saving you from erroneous records and manual data entry, contextual banking simplifies the entire process of managing your accounts payable.
Let’s see how easily you can manage your payables with contextual banking:
Vendor payments made easy
With John’s old system, when a bill was due, he would open his accounting software and his bank portal, check the bill amount, and then enter the beneficiary number, IFSC code and other details to pay his vendor. To stay on the safe side, he would also double-check whether he had entered the details of the correct vendor.
Contextual banking simplifies this process — you can create a payment record and initiate payment from your saved bank account directly from your accounting software. Or choose the payment mode that you prefer. You will be offered multiple modes of payment so you can choose the one that’s most convenient for you.
Updating payment status automatically
Earlier, John would record the status in his accounting software manually as soon as a payment was completed. He needed separate entries for transactions that were paid in full and transactions where he had made partial payment.
With contextual banking, when a payment is made, the corresponding bill is automatically updated to show whether it’s partially or completely paid. Partially paid bills will still show up in your payables so you don’t forget about them. If you pay a bill in cash, you can still update its status — just mark it paid to keep your payables summary accurate.
No more delayed payments
Paying your vendors on time keeps you in their good books, which is important for building a successful business. When John fell behind on his payables and the late payments piled up, his business suffered in a lot of ways. Not only did he have to pay extra in late fees, he also missed out on time-sensitive deals and discounts that would have helped him save even more money. One thing led to another, and he ended up with every business owner’s worst nightmare: a negative cashflow.
To avoid this, you can use your accounting software to set automated reminders for your vendor bills. When your bills are paid on time, you can see your cashflow clearly and make sure your business is in good financial health.
Once John realized how much his inefficient payables process was costing him, he decided to give contextual banking a shot. Now he’s keeping up with his bills and maintaining a better relationship with his suppliers, which gives him much more time to work on his business ideas.
A good business owner treats vendor satisfaction on par with customer satisfaction. With contextual banking, you can organize and track your payments to vendors and keep your business in the best of health.