PENGERTIAN ACCOUNTS PAYABLE BEST PRACTICES
The accounts payable function is probably the most labor-intensive of all of the accounting functions and is therefore a fantastic source of labor savings if the correct best practices may be implemented. The fundamental process generally in most companies is for three forms of information from three sources—an invoice from the supplier, a purchase order from the purchasing department, and a proof of receipt from the receiving department. The accounts payable staff then matches all three documents to ensure a prospective payment is authorized and that the underlying goods have now been received, and then pays the bill. The process is labor-intensive partially because there is this type of wide range of matching to accomplish, but also since the three documents rarely match. Either the purchase order quantities or prices don’t match what the supplier is charging, or else the total amount received does not match the quantities on another two documents.
Because of those inaccuracies, the amount of labor needed to issue a payment could be extraordinarily high. The very best practices in this chapter fall into a couple of main categories, many of them designed to cut back the matching work. One category attempts to consolidate the amount of invoices arriving from suppliers, thereby shrinking the paperwork from this source—typical best practices in this area are using procurement cards and shrinking how many suppliers. Another category tries to lessen or eliminate the number of receiving documents. Typical best practices in this region are substituting occasional audits for ongoing matching of receiving documents, in addition to directly entering receipts in to the computer system. Finally, another category reduces the amount of purchase orders that must definitely be matched. Typical best practices in this area include using blanket purchase orders and automating threeway matching. Other methods to the matching problem involve going away from the traditional matching process entirely, by utilizing payments based solely on evidence of receipt. It is difficult to make use of most of these best practices together, since some are mutually exclusive—one should be careful in choosing the proper best practices. Lastly, a number of best practices concentrate on the overall accounts payable process, attempting to either shrink or automate how many steps required before an organization issues payment to a supplier. Examples of best practices in this area include using a signature stamp and switching to wire transfers. How many best practices in the accounts payable area indicates this function is ripe for improvements. However, some best practices demand a large investment of money or time, as noted in the chart within the next section, so the individual doing the improving should verify that resources are available before embarking on an implementation.