101

IDEAS
to improve every
area of your
Accounts
Payable
Department

www.acom.com
 101 Ideas to Improve Every Area of Your
Accounts Payable Department
We would like to thank IOMA for making these tips available. This article originally appeared in Managing
Accounts Payable magazine, and is reprinted here with the express written permission of IOMA © 2008; for
more information about IOMA publications visit www.ioma.com

ver 500 AP professionals responded to our been field tested. They are the product of AP pros’

O recent questionnaire that asked:

What was the best idea you used over the
past year to enhance your AP department’s
experience over time.
We’ve sifted through all of these ideas and picked the
cream of the crop - those that produced winning
results. Of course, not all of these ideas will be right for
operations? your department. And some you may have thought of
Needless to say, we received many great responses - long ago. But we guarantee that you’ll find many new
and many great ideas. And they’re not just ideas you can put to work right now - with great
pie-in-the-sky schemes. Each and every one has success. They are arranged by major AP area.

Invoice Processing

1. Ask vendors offering terms to send invoices via e-mail to capture more discounts.
2. Send certain processes to a strategic offshore partner - reduces errors, cycle time, and costs.
3. Eliminate "floating" invoices by requiring vendors to send them to AP first.
4. Collect metrics for problem invoices to ferret out the culprits.
5. Use a checklist to track recurring invoices - they tend to sit on desks.
6. Check a vendor’s current payable balance before deciding to return excess inventory - avoids vendors
going into a debit balance.
7. Pay invoices according to vendor terms instead of in order of receipt.
8. Handle inter-company charges on the p-card.
9. Use ERS (evaluated receipt settlement) to eliminate invoices altogether (you pay off of a PO and
receiving record).
10. Reduce the number of times an invoice is handled.

Payments

11. Eliminate manual check requests from payroll—give them the ability to issue checks from their
desktops to a dedicated printer.
12. Increase check runs from twice a month to every week to cut down on extra runs.
13. Send payments via EFT to cut costs and improve vendor relationships.
14. Implement or expand the p-card program—explore new spend categories for p-card payments;
increase rebates (money back from bank for card usage).
15. Stretch payment dates—move vendors to quarterly payments and pay electronically to control cash.
16. Implement Six Sigma to increase DPO (days payable outstanding).
17. Use positive pay to reduce check fraud.
18. Eliminate daily manual check runs by including them in the regular runs.
19. Use fax or e-mail information in the vendor record to send an invitation to sign up for direct deposit.
20. Use pressure-sealed checks to eliminate envelope stuffing.
21. Tighten Form 1099 reporting requirements—more detailed W-9 process identifies 1099 vendors.

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 Travel & Entertainment

22. Move from a 100% audit of expense reports to a lower percentage to slash processing time.
23. Implement direct deposit for expense report reimbursement.
24. Automate the T&E process for greater control.
25. Communicate cut-off dates to eliminate rush checks—stress "no exceptions."
26. Eliminate employees from the master vendor file.
27. Exploit the power of a T&E system by running in-depth analysis reports to look for duplicate charges,
policy violations, and coding issues.
28. Move employee reimbursements from AP to payment through payroll.
29. Require expense reports weekly instead of monthly—less chance of receipts getting lost.
30. Mandate use of travel cards—employees should not be allowed to use personal credit cards for
company travel-related expenses.
31. Have employees image supporting receipts—originals kept in traveler’s department for a short time.
32. Conduct random audits—the element of surprise will reduce fraud.

Technology

33. Upgrade your AP system’s functionality to process payments in a more efficient manner.
34. Explore unused capabilities in your system, such as electronic signatures.
35. Have system calculate payment due dates.
36. Tie in purchase requisition system to AP system—eliminates need to key invoices generated by the
purchasing system.
37. Use a "hosted" system—one accessed over the Web (no big upfront charges or upgrade headaches).
38. Scan invoices, route electronically—faster turnaround and eliminates file cabinets.
39. Receive invoices via e-mail—less mail to open, better copies to scan.
40. Receive invoices electronically to eliminate scanning and input.
41. Implement workflow for non-PO transactions—cuts staff time and adds audit trail.
42. Use a third-party network to turn all invoices into electronic form—essentially outsourcing your EDI and
scanning operation.
43. Form a team to work with IT to develop more usable reports.
44. Use pivot tables in Microsoft Access to analyze data—they’re easy to use.

Analysis & Planning

45. Redistribute clerical duties so AP managers can focus on solving problems and making process
changes.
46. Create a role of analyst within AP to focus on high-level issues, project identification and management.
47. Implement benchmarking to provide evidence to senior management when AP is understaffed.
48. Develop a benchmarking relationship with an AP department at another company whose operations are
very similar to your own.
49. Categorize vendors to show management where the money is being spent.
50. Combine vendors on a national level to get the maximum discount—this also eliminates duplicate
payments.

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 51. Use a recovery audit service to find duplicate payments, overpayments of sales/use tax, and other
payment errors or lost discounts.
52. Use a third-party service to audit telecom and freight invoices.

Cost Control

53. Get rid of the paper! Use e-invoices, scanning, ACH payments, and automated T&E.
54. Implement more controls around T&E expenses.
55. Pursue more vendor discounts.
56. Update policy and procedures manual for all functions—puts focus on value-added steps and shows
steps that can be eliminated.
57. Consolidate AP processes into a shared services environment.
58. Reduce costs associated with employee turnover by providing an employee-friendly and pleasant
working atmosphere.
59. Use the p-card for one-time vendors—eliminates need to set up the vendor in the system.
60. Outsource freight bill payments.
61. Reduce single invoices by having vendor consolidate them into monthly or bi-weekly summary
invoices.
62. Reduce staff in the United States through mobility programs and off-shore work.
63. Cross-train staff to fill in for absences—cuts temp costs.
64. Use OCR (optical character recognition) to eliminate invoice data input.
65. Get vendors with fixed cost monthly contracts to agree to a 1% to 2% discount by paying via ACH on
the first working day of the month instead of the end of the month.
66. Use a vendor self-service portal to shift data entry from the AP clerical staff to the vendor.
67. Check invoices to contracts.
68. Develop and monitor metrics and benchmarks.
69. Eliminate errors by tying the error rate to bonuses and salary increases.

Working With Purchasing

70. Let purchasing know what you need and why—the lights will come on for them.
71. Develop a cross-functional team with purchasing to address issues.
72. Merge AP with purchasing to better incorporate the procure-to-pay model.
73. Use "job shadowing" with AP, purchasing, and receiving—walking in the other person’s shoes will
open eyes and eliminate many problems.
74. Partner with purchasing on a major project (p-card, contract compliance, spend analysis)—working
together strengthens the bond between departments.
75. Assemble all issues, problems, and questions for purchasing in one file—hand it to them at the end of
the day and set a specific time frame for responses.
76. Ensure uniform procedures for vendor setup and changes for both purchasing and AP.
77. Provide an analysis of the company’s top suppliers’ payment history—purchasing can use this in
negotiations.

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 Customer Relations

78. Educate other departments in proper AP procedures, particularly with respect to invoices—late invoices mean
lost discounts and late fees.
79. Raise senior management’s appreciation of payables and its role by building relationships.
80. Meet with departments that have the most issues on a monthly basis to discuss and find a resolution.
81. Handle vendor inquiries and communications via the Web.
82. Assign each AP associate a portion of the alphabet and have them process those vendors—better knowledge
by building a relationship with the suppliers they support.
83. Execute service level agreements (SLAs) with customers detailing nature and quality of services provided.
84. Create an AP PowerPoint presentation and meet with different business units to explain AP expectations and
workflow.
85. Set deadlines for all departments to have invoices turned in on time—send out monthly reminders.
86. Show department managers how to look up invoices so they can better manage their budgets.
87. Hold a monthly training meeting with AP, purchasing, and the accountants, and tackle a tough topic each
month.
88. Create a new-vendor packet that describes payment terms and the W-9 form.
89. Make customer service the focus of the AP department and for other departments to recognize and appreciate
the huge output AP handles.
90. Make AP more available for queries—a simple move that can change a negative view of AP to positive.

Staff Management

91. Get rid of that "bad apple" with the attitude problem—it ruins team dynamics.
92. Conduct weekly workflow meetings, and regularly schedule one-on-ones.
93. Make yourself readily available to staff for concerns or issues.
94. Cross-train staff to give everyone more rounded knowledge—plus gives backup.
95. Upgrade staff skills via certification, audio conferences, and internal training.
96. Conduct desk audits of staff to see pending work—use results for year-end evaluations.
97. Show more appreciation toward staff—a small reward and recognition program, monthly meetings, and bring
in food at least once a month.
98. Take a good look at the staff and their strengths and weaknesses—move them into areas that make good use
of their strengths.
99. Extend lunch time and lengthen the workday to allow for personal calls and errands that affect productivity.
100. Allow flex time—let staff work four 10-hour days so they can take care of personal business during the week.
101. Hire associates with more analytical skills—easier to use them in multiple functions.

Final Point

As you implement new ideas, don’t forget one important thing: Make sure management knows not only what you did but also
how much it saved the company in time, money—or both!

Additional AP articles available at ACOM’s website:

■ How to Deal With 5 Common Vendor Payment Complaints
■ E-Invoicing and E-Payment Surge- IOMA AP Benchmarks Survey

ACOM Solutions Inc.

www.acom.com Tel: (800) 699-5758 Email: sales@acom.com 08/08