Maintaining a healthy accounts payable turnover ratio is critical for sustaining financial stability and achieving operational excellence. This metric reflects how efficiently a business pays its suppliers and manages short-term obligations—a vital indicator of financial health. By understanding and leveraging these strategies, your business can optimise its financial processes and maintain a strong footing in an ever-evolving marketplace.
Poll results
In our most recent LinkedIn poll, we asked our respondents how they optimise their accounts payable turnover ratio for their business.
How do you optimise your accounts payable turnover ratio?
- Build stronger relationships
- Improve cash flow management
- Automate invoicing
- Improve payment terms
Build stronger relationships
25% of respondents believe that fostering stronger relationships with suppliers is key to improving their accounts payable turnover ratio. Reliable partnerships often lead to better payment terms, prioritised deliveries, and increased flexibility during financial crunches. When suppliers trust your organisation, they are more likely to offer favourable terms, giving you more room to manage your cash flow effectively. Establishing open communication and resolving disputes promptly strengthens these bonds and ensures smoother transactions.
Improve cash flow management
50% of the respondents emphasised the importance of cash flow management. Effective cash flow strategies ensure that businesses can meet their obligations promptly while maintaining enough liquidity for growth opportunities. By monitoring payment schedules and forecasting cash flow, businesses can strike the right balance between timely supplier payments and preserving working capital. Tools like forecasting software and strategic planning can also help align payment schedules with revenue cycles, reducing delays and avoiding penalties that can negatively impact your turnover ratio.
Automate invoicing
0% respondents chose automation of invoicing as their primary strategy. This might indicate that businesses view automation as a baseline necessity rather than a standout solution. Nevertheless, automating invoicing processes is crucial for reducing manual errors, speeding up processing times, and maintaining transparency, all of which indirectly enhance the accounts payable turnover ratio.
Improve payment terms
Finally, 25% of participants highlighted the importance of negotiating better payment terms. Extending payment periods, without damaging supplier relationships, allows businesses to optimise cash flow and align payments with incoming revenue cycles. Strategic negotiations with suppliers can lead to more manageable payment schedules and improved financial agility. This strategy remains a practical way to balance supplier expectations with financial goals.
Learn more about B2BE’s Accounts Payable solution.
More information
B2BE’s experience in the supply chain sector allows our customers to build, expand and adapt successfully, enabling greater effectiveness. To engage with B2BE and offer feedback on what matters most to you and your business, make sure to follow us on LinkedIn and across social media. You can also vote in our latest LinkedIn poll. If you’d like to discuss your supply chain strategy, get in touch with us.