14 Accounts Payable Best Practices

By NE Docs | May 18, 2015

14 Accounts Payable Best Practices

1. Pay from original invoices:

Paying from copies can cause errors. If you must pay from a copied invoice, be sure to double check your records for a matching invoice number and dollar amount.

2. Separate duties and internal controls:

By separating duties and internal controls, for example limiting who can add or access your master vendor file, you will be able to help prevent business fraud and achieve better process transparency.

3. Have a W-9 on file before paying a vendor:

A W-9 includes important vendor information that you will need in order to pay. Also, the IRS requires that you get a W-9 from a vendor when you purchase services or inventory in order to create a paper trail. This helps the IRS identify vendors who neglect to report income while protecting companies from illegitimate expense claims.

4. Ensure you have a policy detailing how invoice numbers are entered:

Your AP staff may interpret invoice numbers differently, for example how to handle leading zeroes. In order to help keep you AP processes smooth and efficient, establish consistent rules for invoice data entry.

5. Split responsibilities with compliance controls:

Separating duties and establishing audit trails will help minimize audit exposure while allowing for companies to meet audit mandates imposed through industry regulations.

6. Include account coding and special notes on all invoices:

7. Centralize all invoice receipts (paper and electronic). Centralizing your receipts is the first major step in reducing turnaround time and is a major factor in reducing costs.

8. Instill the importance of accurate purchase order creation:

Accurate and detailed purchase orders are important for realizing the benefits of an automated AP process. This will help improve accuracy and improve the handling of exceptions and discrepancies.

9. Automate invoice matching:

Automating the invoice matching process will allow you to improve the efficiency of your invoice processing.

10. Streamline exception processing:

By routing exceptions directly to the correct person, you will be able to reduce the time and cost to process an invoice.

11. Ease the approval process:

By limiting approvals to a maximum of two levels and setting realistic financial limitations, you can achieve a safe and fluid approval flow.

12. Establish a supplier portal:

Creating a supplier portal will help remove a majority of the burden caused by supplier inquiries on your AP staff.

13. Educate suppliers on invoice requirements:

Making it easier for suppliers to submit invoices (PDFs, e-invoices, etc.) and setting guidelines to ensure prompt payments will strengthen stronger supplier relations and invoicing accuracy.

14. Consistently check for duplicate payments:

Automating your AP processes is the best way to reduce and/or eliminate duplicate payments. For those still manually processing invoices, it is best to check for duplicate payments and reduce leaks in your cash flow.

Looking to improve your AP process? Ask us about our AP automation and invoice pre-processing solutions.

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