Accounting and Bookkeeping

5 Ways to Make Your Accounts Payable Process Seamless

Originally Posted: June 6, 2022
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Accounting and Bookkeeping
  1. Use cloud-based tools. Transition your accounts payable (AP) process to a cloud-based service that interfaces with your accounting system. This can’t be overstated. The technology that AP systems provide is continuously improving. If implementing a system seems intimidating, do not fear. Most have good customer service and can help you through your difficulties. Look for an application that can upload and retain copies of the invoices as well as allow for multiple levels of approval. These features not only help with new remote working challenges, but help with good practices for separation of duties.
  2. Step away from the checkbook! Make payments electronically. Electronic transactions are easier to track and create essential documentation to make researching a payment much easier. Banks can also add security features to help identify and minimize fraudulent transactions.
  3. Strengthen your written policies. Do you have an AP policy, and is it up to date? If your grants require you to follow specific accounting regulations or if your organization has a financial audit, having updated, documented policies is essential. The policies should follow the steps that you take internally and include your procurement, approval, and payment processes.
  4. Strong internal controls. If the same person who enters the bills initiates the payments, your internal controls are not sufficient. Small organizations struggle with this, but there are steps you can take to improve. One easy mechanism is requiring and documenting approvals. Online, cloud-based AP systems do a great job with this, but if the technology seems daunting you can document approvals with PDF signatures or even emails. You should store the approval with the invoices (electronically), so that retrieval is easy. Many accounting systems allow for attaching documents to a transaction record, and this is an ideal place to attach both a vendor invoice and any supporting approvals.
  5. Training. Teach your team to enter invoice upon receipt/approval. Read and review the contents of the invoices carefully. Train your team to differentiate between a statement balance and an invoice amount. A statement balance might include prior invoices that are already entered into your accounting system or include late fees. Don’t ignore error messages noting a duplicate invoice number. Many AP discrepancies can be traced back to entering an incorrect amount in your accounting system which creates unreconcilable differences between you and your vendor. Time only compounds these issues. A frequent and thorough review of the Aged Accounts Payable report should be an established practice.