10 Best Practices for Accounts Payable

Laresa offers a very good list of items in operating the AP department.

What's outlined predominantly addresses an AP function working primarily off of paperwork submissions. In some companies, it's a different world with EDI invoice submission, posting and payment processing. Also depends on the company's ERP platform, type of business, goods receiving processes and related two or three way match requirements.

Having done considerable internal control reviews, here are a few more observations.

1 - Try to segregate who has access to add-change-delete vendors in the vendor master files from the actual processing of invoices for payment, and/or have someone in management monitoring this activity. Many of the systems I've looked at did not have the ability to print the changes made to the vendor masterfiles, so controlling access can be critical to avoid potential theft and fraud.

2 - Set the AP systems masterfile configuration to a default setting that most represents the vendor type(s) used most frequently. Most systems have multiple vendor type categories that can be assigned. This simplifies the set up process, and prompts fields that must be completed. Typically this allows for a default GL code to be assigned. Below this security level, you can prohibit certain users from changing from the default GL code.

3 - Paper files - my preference is these are set up by VENDOR. Some larger companies I've observed file by process batch#. It's a real pain to have find multiple batches and pull multiple files when researching and reconciling issues.

4 - Make sure you understand how your system is assigning the GL month/year for accounting periods. I've seen where this was done wrong, and AP clerks used older invoice dates that drove the accounting period entry, having the effect to change financial results in closed periods that were not intended nor anticipated. Some of the lower end GL products I've seen use the invoice date field to control the accounting period entry.

5 - Have a control log mechanism over the checks being printed, whether the forms are pre-printed with numbers, or the check numbers are assigned by the system. This control log should be going to the person responsible for the bank account reconciliation, which should be independent of the AP staff.

Hope these add some value, Randy

Mark:

Great observation. We have the Resource library tab which has scores of donated resources - everything from legal docs to processes and procedures - and it's all freely available to our members. The search capability is not where we want it to be just yet, but we are close to completing our upgrade of search across the site so that will make it much easier to find resources (and everything else on Proformative). We will have some upcoming programs to encourage our members to contribute to the Resource library so that we can build a resource much as you describe. Thanks again for your comment.