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An accounting issue we are currently grappling with as a manufacturing entity is the high level of errors we are seeing processing A/P.

Is there a good way to benchmark our rate of processing errors encountered while executing the A/P function? The traditional 3-way match is a simple concept, yet for a company of our size ($100 million) it seems the variety of issues we are facing is significant. For example, the large number of inventory receipts not being entered in the system, discrepancies between invoice and PO costs, use of an exhausted PO when making orders, etc.

Answers

Topic Expert
Mark Richards
Title: VP of Finance & Operations
Company: RBA Consulting
(VP of Finance & Operations, RBA Consulting) |

To make sure you've seen this blog post.

https://www.proformative.com/blog/laresa-mcintyre/10-best-practices-accounts-payable

Julie Church
Title: Controller
Company: Latis Networks, Inc.
(Controller, Latis Networks, Inc. ) |

Just a comment - I didn't feel that the blog post that you were drawing attention to really addressed the issues in your outline. The issues outlined went quite a bit beyond the scope of the A/P 3-way match - inventory issues, order placement problems, etc. - none of which seem to be addressed by the blog.

That being said, a general rule of thumb is that if you measure it, folks will pay attention to it. In the past I have graphed numbers and amounts of voided checks, debit and/or credit memos as a way to measure A/P processes with good results.

Michael Jameson
Title: VP Finance
Company: Undisclosed
(VP Finance, Undisclosed) |

Congratulations on measuring this issue at all. As a long-time finance ops guy, I will attest that measuring, tracking and maintaining your own benchmark is the first and biggest step down the path to remediation. Until you do this and make the measurment part of everyone's daily life, you will not get buy-in or attention to the issue. Another practical side to being your own benchmark guide is that finding truly meaningful (apples-to-apples) benchmarks is exceedingly difficult and typically requires hiring an outside firm to do a study, the answers to which you probably already know if you are measuring and actively managing the issue yourself.

Saul Kemble
Title: Accountant
Company: National Association of Social Workers C..
(Accountant, National Association of Social Workers CA Chapter) |

The variety of errors may seam endless, but the solutions probably will come from the bottom up. If the persons making the original errors become aware of the error and are forced to figure out a way to "clean up the mess" they will also figure out ways to avoid having to clean it up. Knowledge is power, do they know what they are not doing right, and perhaps more importantly do they know that you know what they are not doing right?

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