Accounts Payable in the 21st Century
Many large organizations have made massive inroads into accounts payable and quite frankly will find this chapter rather basic. To those I say simply move to Chapter 2. However, many finance teams are wedded to Charles Dickens’s processes and procedures.
This chapter is an extract from a white paper1 I deliver around the world that has revolutionized many accounts payable teams.
Removal of Charles Dickens’s Processes
I believe the accounts payable team is the center of an accounting function, for without its smooth operation:
- Monthly accounts cannot be prepared promptly.
- The company does not, at any point in time, know its total liabilities.
- Budget holders spend too much of their valuable time processing orders and approving invoices for payment.
- There is a low level of accuracy in the monthly accounts due to missed liabilities and posting errors.
- The processing procedures are more akin to the Charles Dickens era than to those of the 21st century. (after all, Charles Dickens had a checkbook and received paper-based invoices.)
- Suppliers are forever on the phone querying payments.
- Expense claims are a nightmare for claimants and the accounts payable team.
Let us look at some areas to attack.
Move to a Paperless Accounts Payable Function
As already mentioned, many accounts payable (AP) processing procedures are more akin to those from the Charles Dickens era than to those of the 21st century. Why do we go from an electronic transaction in the supplier’s ...