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The process of evaluating accounts payable automation solutions can be a daunting and very confusing task with all the options and possibilities.

Let's face it, accounts payable automation is not a new concept and has been around for years now. Once upon a time this type of solution was for the big boys, but today companies of all shapes and sizes can realize a significant benefit and reduction in accounts payable. 

If you're interested in the cost of accounts payable automation to decide if this is even doable for your organization or need a quote to satisfy your purchasing requirements then consider using our "SELF-SERVICE" quoting system.

With all Finance has to get done in a given day sometimes it’s hard to find the time to step back and track how efficient and effectively your department is running. Finance deals in numbers all day. But how often are you generating numbers to find out how efficient your finance team is?

But benchmarking is more critical than ever. By monitoring your functions’ performance you can determine where you can streamline, boost efficiency (and possibly cash flow) and incentivize staffers to do an even better job.

So what are the best metrics out there? Here are a few to get you started. How many of them are you currently using … and how many more could you be?

Accounts Payable

• Cost per invoice (Total department spend [including allocated overhead] divided by the number of invoices processed)
• Time to process invoices (Average time from when an invoice is received to when it’s ready for payment). Note: Don’t factor in actual payment time, since you probably do some strategic payment timing.
• Percent of invoices paid within terms
• Early pay discounts (percentage of invoices you can pay without paying the total invoice amount)
• Percent of duplicate or erroneous payments
• Days payable outstanding (accounts payable divided by cost of sales) * Days)

Accounts Receivable

• Days sales outstanding (Total Accounts Receivables/Total Credit Sales) x Number of Days in the period that is being analyzed)
• Best possible DSO (Best Possible DSO = Current Receivables/Total Credit Sales X Number of Days)
• Collections Effectiveness Index
  Beginning receivables + Monthly credit sales – Ending total receivables  x 100
  Beginning receivables + Monthly credit sales – Ending current receivables
• Average days delinquent (average number of days invoices go past due)

Payroll

• Cost per payroll payment
• Error rates
• Number of manual checks cut
• Days to process new hires
• Cost per payroll inquiry
• Days to resolve payroll inquiries (Note: You could also use this in A/P with days to resolve vendor inquiries and in A/R for customer questions.)

Whether you’re currently using a handful or the whole lot of these metrics, one thing’s a must: Let your staffers know what you’re using to track the department as well as their individual progress.

The last thing you want is for people to think you’re trying to “catch them” doing something wrong in their jobs. Better to position metrics as a way to raise the bar and a springboard to figure out what needs to most attention.

Please share any additional metrics you are using today!

Let's face it, processing supplier invoices can be a daunting task and in some cases a smaller accounts payable department can feel the "invoice processing pain" simply due to a lack of resources more so than larger companies who may be drowning in shear volume of invoices. Either way the steps of processing, routing, matching, approving, coding, entering and paying invoices is error-prone, labor intensive and in-efficient. So what do you do if upper management isn't onboard with accounts payable process improvements or invoice automation?

Here are a few ways that being organized and following standard processes can help.

1. Don't pay from invoice copies.  This can lead to duplicate AP transactions and payments. If you have to pay from a copy, be sure to check your records for the same invoice number and dollar amount.

2. Make sure you have a W-9 on file BEFORE paying a vendor. This will save a lot of hassle at year-end when you need to prepare 1099s.  Fines for not complying with 1099 reporting can be hefty and the rules change from time to time. 

3.  Have rules about how invoice numbers are formatted and entered.  If accounts payable team members are all using their own rules about entering invoice numbers (like what to do with leading zeros), it will be difficult to track down anything.  Also, make sure you have a policy for invoices that don't have invoice numbers on them.

4.  Segregation of duties! The person entering the invoice should be different from the person approving the invoice who should be different from the person signing the check.

5.  Centralized receipt of supplier invoices. Okay, so this is easier said than done however, having all invoices come to the accounting department first before being sent out for approval(s).  This way the invoice can be logged before it enters the black hole.

6. Enter invoices one at a time. Do not enter invoices as a batch.  Each one should be entered individually in order to have an audit trail.

7.  Coding of invoices. All invoices should have the G/L account coding written on them as well as any notes about special handling.

8.  The amount of the invoice should be entered as billed even if you don’t plan on paying the full amount.  A credit memo can be entered and matched against the invoice later.  The key is to remember the audit trail.

9.  Have a new vendor welcome letter that you can send informing them of where invoices should be sent, what information you require to process their invoices (like a vendor ID number) and any forms you need completed.  Vendors will appreciate the information to ensure their payments aren’t held up.

10.  Watch your payables carefully to take advantage of any discounts being offered by vendors.  It can add up to a nice sum by the end of the year.

11. Setup your vendor files alphabetically and file your paid invoice as soon as completed. 

There are many more ways to ensure a smooth accounts payable process if upper management won't go for process improvement. Feel free to list your own ideas that may help others looking for ways to make their accounts payable process better.

We all know how important it is to keep customers happy. Don’t meet their needs or make them mad and they may leave you. Even worse, their comments may cause others to leave with them. Just like customers, you also need to keep vendors happy. If you don’t you may find your credit line cutoff and that you cannot get essential products and services. Imagine what happens when you cannot get the product you need to sell or use in your manufacturing process.

Pretty soon it impacts your company’s ability to satisfy customers. The accounts payable days analysis is a statistic you can calculate that indicates how good of a job you are doing managing accounts payable and keeping your vendors happy.

Days payable outstanding (DPO), defined also as days purchase outstanding, indicates how many days on average a company pay off its accounts payable during an accounting period.

Days payable outstanding means the activity ratio that measures how well a business is managing its accounts payable. The lower the ratio, the quicker the business pays its liabilities. It also shows the average payment terms granted to a company by its suppliers. The higher the ratio, the better credit terms a company gets from its suppliers. From a company’s prospective, an increase in DPO is an improvement and a decrease is of course, "not good for business and cash flow".

Value is a two-way street. Of course, vendors want to provide their clients with the best possible return on their investment. But they're a business, too. If a client makes a project difficult to staff, hard to schedule and costly to execute, more likely than not it will affect the initiative's outcome and value negatively.

On the flip side, though, there are clients, even very large ones, that help vendors get through their internal processes, bureaucracy and political hurdles. Clients that smooth the way for vendor teams internally are going to get a superior value from their investment in our services. Effort will be spent on the work the vendor was hired to do, not on jumping through hoops. The vendor staffs up, their people get to work and they are able to focus – which always results in better quality and value at the end of the day.

Once negotiations are closed, vendors want to shift their focus from winning the business to meeting the goals and expectations of their client. Yet they sometimes encounter major delays, bureaucratic hurdles and work stoppages based on internal processes and politics. This only hurts the client's project, yet it is often caused by the client organization's own internal structure and approach to management.

So. Look at your vendor management processes. Would you want to work with you? Are you making your vendors happy? Do they have a fast-track, once you've signed with them? Or do they have to navigate a complex system of approvals and oversight? Are your schedules in alignment with theirs? Do your internal teams understand what's going on, who's involved and what the goals are? How many levels of management do they encounter? Do they have a point-of-contact with authority?

Vendors usually expect to navigate these processes with every client. Even giant companies with hugely complex internal systems and challenging politics can get great value from their vendors by providing them with the tools and management resources they need from the start. As businesses invest millions into their technologies, and vendors do more and more of the work, any organization that engages with technology vendors on key initiatives risks a great deal by failing to be good to work with.

The benefits of integrating Vision360 Enterprise accounts payable processing with MS Dynamics:

- Seamless integration reduces the need for technical resources
- Allows for rapid deployment
- Accounts payable dashboard provides 100% visibility to supplier invoices
- Eliminates 100% of paper invoices
- Captures email invoices electronically
- Eliminates the need for data entry
- Powerful coding tools
- Perform 2 & 3-way matching
- Data validation engines ensures accuracy
- Centralized processing and controls
- Complete audit trail of approval activity
- Generate instant efficiency reports
- Instantly access invoices from electronic archive
- Enforces your security, processing rules and compliance

We do not take a one size fits all approach to any engagement. Our strength is in our ability to objectively evaluate the business problems and challenges that affect every day. By leveraging our business process solutions experience, coupled with our technical expertise we are able to effectively analyze and recommend a variety of viable solutions to fit the needs of any business problem and challenge we are faced with.

For more information contact us or call 603-437-1400 x308

An Accounts Payable manager from Carolina Steel Group, LLC is heading to jail after being convicted of multiple counts of wire fraud and money laundering. 
 
During her time at the steel company, Angela Womack, 51, allegedly opened personal accounts under the name ‘IBOCF’ and would create vendor cheques   payable to ‘International BOCF,’ attempting to cover her tracks by including  them on the company’s vendor reports... read the full story.