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Looking for Accounts Payable Best Practices / Efficiencies while maintaining good internal controls

Nathan Schmidt's Profile

Our organization deals with a large volume of employee and physician expense report reimbursements.  We currently use a signature stamp to stamp between 200-300 checks per week and have Executives manually sign over a specific dollar threshold.

I am looking to print electronic signatures on checks but want to maintain adequate internal controls to avoid possible checks being issued without appropriate review.  I plan to review a check sequence log and check register for all payments to review the list of vendors being paid and also a sample/random audit to review the detail support.  Any suggested accounts payable best practices or suggestions that have worked for anyone?

In regards to expenses, we have begun to receive more and more requests for electronic approvals, scanned receipts submission vs. orginals, etc.  I am looking for suggestions on how to best transition the organization from all paper original reciepts to an electronic approval and documentation process.  My concerns are ensuring that adequate controls are in place and that adequate documentation either (electronic or hardcopy) is maintained as required by the IRS in the event of any future IRS audit.

As part of this transition I will be updating our invoice approval and expense reporting policies and procedures and would love any examples that you are willing to share.

Thanks for your suggestions or providing any available resources!


Sara Voight
Title: Controller
Company: Critical Signal Technologies, Inc
(Controller, Critical Signal Technologies, Inc) |

Wow! You are asking for a lot in your question(s). Everything is on the table when it comes to improving efficencies in the payables area. I am going to address only one of your topics based upon what worked for me in the past, expense reimbursements:

We instituted a policy where all expense reports were reimbursed on the bi-weekly payroll check (as a negative deduction). This kept the expense reports separate from the contract work payments showing up on our payables check runs. There should never be an overlap for who gets paid what, but an IRS auditor tends to look at all the 'people' getting paid and that falls into their audit scope. I was able to show that expense reimbursements were only for employees on our payroll system, and the only people showing up in AP were contractors covered through annual 1099s. My boss didn't want to take advantage of using our payroll system for 1099 payments as he was concerned for an audit.

Once the basics were covered from the deadline for remittance and reimbursment, and requiring originals of all invoices (to avoid something being included on more than one expense report), we moved onto the next step - how to approve and maintain electronic records.

We developed a format for how records were to be submitted and they flowed through the appropriate supervisor for approval. Initials/Date/Dept (i.e. SV082611FA)identified who, what, when, and they arrived in HR from the approving supervisor. At the beginning we did require the hard copy of everything to be turned in at the same time and the supervisor's signature was on the cover sheet circling the amount approved. When we moved further along, we required electronic submission and the employee filed their original documentation for random audits by HR or Finance. When this started going all electronic we made a point of doing random audits on nearly everyone with all the supervisors. This sent the message that we were keeping track of items very closely.

What will make a big difference is how items are coded to the general ledger and having a clear idea of how much should be reimbursed through expense reports. If you are covering internet connections to a maximum of $65 per month and you have 50 employees, a monthly expense of $5K will raise flags. This also requires you to enforce timelines for submission of reports. It sounds like they are flowing through very fast at your company, but I had something similar where one bill was often overlooked and then we received four months at one time. It was once explained to me that someone has to repeat something 21 times for it to become a habit. That means a lot of patience as you roll out a new process.

I hope my suggestions give you some ideas for improving your workflow.

Jane Levin
Title: Corporate Controller
Company: Private
(Corporate Controller, Private) |

Make it easy and it will be used. That's what I have learned is key when asking a large number of people to do something as mundane (although important) as expense reporting. We use a web-based expense management system that allows users with smart phones (our highest users of expense reports are managers and above) to take photos of receipts with their phones which can automatically get attached to their account for easy application on their expense report. It's pretty slick. That, in combination with easy traditional scanning and upload of receipts makes the most annoying part of expense reports go away and has increased our employee utilization rate for expense reporting and made it easier to stay within the guidelines for reporting and reduced work by our staff in checking up on these reports.

I guess the short story is: make sure whatever system you go to has drop dead simple employee processes for managing all aspects of creating their expense reports or you will just be signing your accounting/finance group up for more manual auditing.

Topic Expert
Brenda Morris
Title: Board of Directors, Audit Committee Chai..
Company: Boot Barn
(Board of Directors, Audit Committee Chair, Boot Barn) |

As Jane and Sara mentioned there are some great on-line tools and electronic payment systems that will really help your organization. Another thing to think about is asking your AP team for ideas and engaging them in learning new trends and processes. There is a great resource for Accounts Payable Professionals, you can find at I have had my AP Manager or Leads become a member in the past and then they bring some great efficiencies to the table on their own. Also, your bank is a great resource for expense reimbursement tools and will often include it in the treasury relationship. Good luck!


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