As an information technologist, you may be wondering: "What exactly does the accounts payable department do?"
Accounts payable (AP) pays your organization's vendors (or suppliers). More specifically, they're responsible for:
- Verifying legitimate vendors and paying their invoices
- Being on the lookout for fraudulent, inaccurate, or duplicate invoices
- Reconciling the ledger and avoiding late or missed payments altogether
What's more, AP must do this quickly and efficiently to capture early-pay discounts. The breadth of their work is wide, and as such, they have to wear many different hats to get the job done.
AP is often thought of as a labor-intense department with little to no room for innovation or automation. Because of this, they're left with languishing technology and inefficient workflows.
That's where IT comes in. With a fresh set of eyes, IT can observe AP's processes to help streamline, find solutions that will save them time, and help them avoid costly errors.
So the next time you catch AP wearing any one of these hats, consider the following ways to help them out:
1. Pith helmet (the Safari hat):
Records need to be saved for varying amounts of time. In a publicly-traded company, financial records may need to be saved for up to seven years (pursuant to SEC § 210.2-06 Retention of audit and review records). It's not surprising then that anything can happen in that time: from a simple vendor invoice inquiry, all the way up to an audit. AP needs to be ready to play the part of an archeologist; putting on a pith hat, grabbing a shovel, and unearthing the past in a quest for the golden invoice.
How IT can help: Seven years of documents can amount to a lot of bankers boxes—sometimes requiring a warehouse to store it all! Worst yet, having to rummage through all those boxes is like looking for a needle in a haystack. IT can help by finding a document scanning solution. There are many companies that will take entire filing cabinets, scan its contents, digitize them (the process of making the text searchable through OCR), and upload it for easy retrieval. IT may want to discuss prioritization with AP, wherein only a range of documents are scanned at first. This can nudge AP into the 21st century.
2. Deerstalker cap (the Sherlock Holmes hat):
It's fitting that AP switches hats once the artifact's been unearthed. Only with a deerstalker's cap on, can AP get down to sleuthing. Although it may not play out like a sordid classic novel, AP unravels the mysteries behind missed or duplicated payments, resolves purchase orders and invoice discrepancies, plus verifies outstanding memos all with gumption and wit.
How IT can help: IT can help AP by automating the audit trail. This is the path a payment follows from inception (starting from the purchase order, or PO) all the way to remittance (confirmation that a payment has cleared). Think of this as package tracking and delivery confirmation. This can be done with nothing more but a group email address with advanced filtering. In this example, authorizing an invoice would be as simple as replying with 'APPROVED' or 'DISAPPROVED' to move the invoice along. However, this stops short from being a proper audit trail investigation solution without the ability to search. For that, turn to a server-side inbox- and sent-items archiving solution.
3. Green eyeshade visor:
Accountants would wear green eyeshade visors to show they're crunching serious numbers. That was their way of saying, “do not disturb." So respect those wishes and avoid bothering them.
How IT can help: Since the green visors were really a response to the harsh lights from incandescent lights, IT should find modern ways to make AP's working conditions more hospitable. Start by calibrating monitors to the surrounding light. Focus on ergonomics: adjust monitor and desk height to reduce neck and shoulder strain. Again, AP doesn't need another interruption in their day, so please do this after hours.
4. UN beret:
AP plays a critical role in preserving vendor relations. They do this by paying all vendors and suppliers on time every time. These accountants are the first to respond if anything goes wrong. It's the finesse and attention to detail they employ that keeps relationships strong. They may not be fluent in multiple languages, but they're fluent in the language that matters most: keeping vendors happy.
How IT can help: IT can assist AP by auditing the master vendor file, or MVF. The MVF is a Rolodex-like file that contains vendors' payment information. It's critical that this file be up-to-date to ensure timely payment. Make sure this file is being backed up at regular intervals. A corrupt file could bring a company's ability to pay its vendors to a halt. Equally important is the security of this file, as it's a common point of entry for fraud. Not only could a valid vendor not be paid, but a company risks theft if lax security measures are in place. Implement a mandatory password change interval to access this file, and make sure AP understands the dangers of sharing credentials to the MVF.
5. Chauffeur's hat:
Jason Statham's character in “The Transporter" employed some impressive driving techniques to get the goods safely delivered. Although an accountant is not a trained stunt driver, they'll still drive with a similar sense of urgency as Statham when transporting a batch of checks. Whether it's getting a signature or dropping a stack of supplier checks at the post office, accounts payable always delivers the goods.
How IT can help: This can be as simple as a dedicated weigh station and postage sorter. That can go a long way in helping AP route and mail out checks in a timely manner. Going a step further, IT can help them implement electronic payments. Whether it's through card, ACH or wire transfers, ePayments can eliminate a lot of time spent routing authorizations and shorten the time it takes vendors to receive payment.
To wrap up the hat analogy…
IT can hang its hat on a job well done if they spend the time first observing AP's processes before suggest changes and improvements. You wouldn't want to implement anything that would force AP to reinvent the wheel—or in their case—their workflow. They're already comfortable in their way of doing things, so help implement technology that works in their everyday lives—not the other way around.
About the Author
Ralph is a Research Analyst at Nvoicepay. He's passionate about marketing technology and creating engaging content that delivers value to the consumer.More Content by Ralph Perdomo