High-level financial considerations depend on good AP

In enterprise-scale businesses, liquidity, cash flow, and working capital are high-level financial considerations that are typically the preserve of ‘C’ suite executives. However, ensuring they positively indicate good financial health relies upon the day-to-day operational reliability and efficiency of the accounts payable (AP) function.


  • Liquidity refers to a company’s ability to meet short-term financial obligations promptly, often determined by its cash reserves and ability to convert assets into cash quickly. Effective management of liquidity ensures that a business can honor its commitments, including payments to suppliers.
  • Liquidity is a credential indicative of a company’s financial resilience, representing its capacity to meet its liabilities using readily available assets. In essence, liquidity serves as a buffer against unforeseen financial challenges and underscores the company’s ability to navigate economic fluctuations with agility and confidence.

Liquidity, cash flow and working capital: Financial health KPIs

Alongside liquidity, cash flow and working capital can be taken as Key Performance Indicators (KPIs) that determine an enterprise’s financial health.

Cash flow

  • Cash flow is the movement of cash in and out of a business over a specified period. This serves as the lifeblood of the enterprise. Having sufficient flow to meet demand dictates the company’s ability to cover day-to-day operating expenses, invest in strategic initiatives for growth and innovation, and fulfill financial commitments in a timely manner.
  • A healthy cash flow not only sustains operational continuity but also underpins continuing success in an operating environment that is hallmarked as ultra-competitive and prone to change, including challenges such as sudden upheaval and disruption. Having ready access to cash enables business agility and the ability to seize and capitalize on rapidly emerging market opportunities.

Working capital

  • In purely mathematical terms, working capital is the difference between current assets and current liabilities, and reflects a company’s ability to meet its short-term financial obligations. Working capital serves as a dashboard indicator of the company’s operational efficiency and financial health.
  • Working capital represents the company’s ability to manage its short-term resources effectively, striking a delicate balance between liquidity and profitability. Optimal working capital management ensures that the company can fund its ongoing operations, maintain inventory levels, and capitalize on growth opportunities without succumbing to financial strain or liquidity constraints.

AP automation as a bedrock for outstanding financial credentials

The AP function plays a crucial role in managing cash flow by overseeing the timing of payments to suppliers. In tandem with Accounts Receivable managing the inflow of cash from debtors, through optimizing payment terms and effectively managing AP processes, enterprises are better positioned to maintain adequate cash flow to support daily operations, investments, and growth initiatives.

Orchestrating AP and AR in a coordinated and logical manner to control and manage cash flow directly determines the working capital that is available to the business. Efficient management of AP processes is a major component that supports the working capital position, ensuring sufficient funds to cover operational expenses and capitalize on growth opportunities without relying on external financing.

Essentially, a well-functioning AP process is inextricably linked to liquidity, cash flow, and working capital management in enterprise-scale businesses. Optimizing AP processes through automation enables enterprises to improve liquidity, maintain healthy cash flow, and strengthen their overall financial health and resilience.

An automated AP workflow streamlines each step of the accounts payable process. Through automating manual tasks, and reducing errors, efficiency is transformed. When compared with performing AP with time-consuming manual processes, automation solutions achieve greater accuracy, support compliance, and ultimately underpin financial success.