When you adhere to a defined revenue recognition policy, you avoid the pitfall of taking cash flow for granted which can make all the difference on...
Accounts Payable - The Process
Businesses literally run on Accounts Receivable and Accounts Payable. So why is it that organizing, managing and ...
Businesses literally run on Accounts Receivable and Accounts Payable. So why is it that organizing, managing and maintaining an AP process often falls to the bottom of the priority list?
Building a healthy AP process starts with addressing a few simple — but crucial — questions:
Who’s determining the purchase or service needed? Who approves the need? Who actually procures it? Who ensures the purchase or service is actually received or completed? Who processes the vendor invoice into Accounts Payable? And finally who and how is payment rendered for these items. With all these steps if issues arise along the way, where can people get help to resolve them quickly and correctly?
I think it's all about careful separation and defining of duties. There should always be multiple parties involved in the AP process. One individual person, no matter how looped in they may be, won’t instinctively know all of the relevant info for every single purchase but more importantly the person buying the product or services should never be the same person responsible for payment of such. By dividing the process up among different people, even different departments it gives the transaction transparency and helps mitigate fraudulent spending and payments.
As someone who’s been the point-person for accounts payable for many years, I’ve navigated my way through plenty of different systems and setups. A company with a solid AP process has a clearly-established process, a series of defined steps that leave no room for interpretation. (Because trust me: if you assume people should just fill in gaps along the way, you’ve got a rocky road ahead.)
That might sound daunting, but leveraging a system like Work.software makes this a breeze. Setting up a play empowers employees to take ownership of their part of the AP process. Plays can always be modified as needed, so once a box is checked, employees and managers can easily adjust accordingly.
When each person knows what’s expected of them, there’s far less room for confusion as we move over to AP’s counterpart the Accounts Receivable process. The data is more likely to be correct, the invoice goes out on time and to the correct recipient, and we know the payment method by which we can expect the funds.
No need to wait for a totally avoidable emergency situation. Let Work.software do the heavy lifting on your AP process. Let plays show the separation of duties and be your narrative for a successful finance team.