Samantha RyanOctober 2016

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“Creating

Excellence in

Accounts

Payable”

CONTENTS PAGE:Page

The Changing Role of Accounts Payable 3

Building an Excellent Accounts Payable Function 4

The AP House 4 Foundations – A Great Accounts Payable Team 5 Pillar 1 – Process 7 Pillar 2 – Systems 8

o Procurement to pay solutions 8o Duplicate payment software 9o EDI invoicing 9o Intuitive Scanning Technology 10o Supplier portals 10

Pillar 3 – Controls 11 Pillar 4 – Review 12 The Roof – Great Management 13

Keeping abreast of P2P 15

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The Changing Role of Accounts Payable

Accounts payable teams often have interaction with most areas of a business through payment of supplier invoicing and processing of employee expenses. The AP team can be a wealth of knowledge about how a business works and where improvements can be made. By being the end point of many business processes, the AP team will have a good understanding of potential process improvement opportunities. So why not use AP as a value adding department?

AP teams can drive value contributing to a company’s bottom line in several ways:

Automation of AP : cutting costs of processing, eliminating errors and duplicate payments and shortening approval times

Early payments: by approving earlier, payments can be made earlier therefore capturing early payment discounts

Reporting: by capturing data, analysing and providing MI, the AP team can help to support improvement in processes helping the businesses to be more efficient

Gone are the days of an AP team sitting in the corner stapling together invoices, purchase orders and delivery notes. The AP team can now be an exciting, innovative and creative department to work in.

Addressing the myths:

AP is not a purely data input functionYou can become an AP ProfessionalIt doesn’t have to be a stepping stone to something elseWorking in AP can be fun and excitingAn AP team can add significant value to a business

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Building an Excellent Accounts Payable Function

Do you want to aim for delivering Excellence as the Average? Do you want your team to be busy geniuses and not busy fools? Do you want the reputation of your team to attract great new people? Do you want your team to enjoy coming to work every day?

Well, why not? This sounds like a great place to work!

Building an excellent AP function takes time and energy but can be very rewarding and worthwhile.

Here is my strategy for creating Excellence in Accounts Payable ....

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Foundations – A great accounts payable team

Analyse the responsibilities within the AP team Create the right structure, roles and responsibilities Understand the culture of the business and the team Identify the essential skills for each role Know the gaps in your team Build the right recruitment strategy Create empowerment and accountability for your AP team

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The Accounts Payable House

Creating the right team is essential to the success of an AP function. Once that great team is in place, don’t forget to nourish the team. Development and progression need to be continuous to retain and attract good people. Why not create an environment where a team want to come in to work every day? These team members spend a lot of time together

Some of my own examples:

Skills Auditing – a regular review of skills within the team which identifies training needs and skills gaps across teams

Buddy System – ensuring our new starters feel welcome and comfortable from the start.

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Celebrating Success – don’t forget to say well done and thank you.

Why not create some fun Accounts Payable Awards to celebrate the end of a year:

A Achievements

M Motivated

A Absence

Z Zany

I Inspirational

N New projects

G Great Service

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Pillar 1 – Processes

Define

Identify the ultimate goal Understand the resources needed: systems, documents, time Understand what steps are needed to accomplish the ultimate goal Arrange the steps into the most logical sequence Create an exception list of potential outcomes Test the sequence

Document

Ensure policy documents are easy to understand Make your user guides easy to use and follow Make it easy to update as needed

Maintain

Update as you go Communicate processes and changes clearly to the team Agree a regular review period Ensure documents are quality and version controlled

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Pillar 2 – Systems

Your systems should be supporting you in what you are trying to achieve, not hindering you. Having a good systems infrastructure frees up your team to concentrate on value adding tasks.

Procurement to pay solutions

A good procurement to pay solution will allow control and visibility of every transaction flowing through. When looking at your procurement to pay solution, consider the requirements of the business from identifying a need to source something to paying the supplier. Look for systems that will compliment and grow with your business and be flexible enough to be truly embedded across your organisation.

There have been great strides forward in recent years to end to end procurement system solutions. Make sure you keep up to date on the latest technology. Don’t become complacent. Always be looking for the next big thing in your arena.

Attending webinars can be a great way of keeping abreast of what is happening in the P2P field.

Try these links to help you become an expert in the field:

http://www.p2pnetwork.org/

http://www.sharedserviceslink.com/

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E-sourcing

Supplier Portal

Requisition

Purchase Order

ReceivingInvoice

matching and payment

PO Flip

Reporting

Supplier Management

Duplicate payment software

Processing invoices manually = errors. It is just too easy to mistake I for 1 or 0 for O. This can too easily lead to duplicate payments.

Many organisations will use recovery auditors to identify duplicate payments. This can be a costly process and is entirely reactive. Waiting too long to recover duplicate payments can result in no recover at all.

Having software to proactively identify duplicates before they become payments can add great value and can ensure that no duplicates go out of the door, therefore no chasing is required for refunds. A far more beneficial process for the business!

EDI Invoicing

The exchange of documents electronically can provide benefits to the P2P process:

Reduce processing times Eliminate keying errors Reduce risk of duplicate payments

Don’t confuse EDI with submission of invoices by email. Whilst there is a benefit of receiving documents by email, EDI technology gives far more benefits.

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Intuitive Scanning Technology

OCR (optical character recognition)scanning is the conversion of an image into an electronic file. This solution will capture key data from an invoice, “lift it” from the image and turn it into data to post into your AP system. The first wave of this technology was designed around building large volumes of templates and therefore needed a significant investment in time to get the technology working.

ICR (intelligent character recognition) is an advanced version of OCR. Most ICR software is now able to learn for itself, meaning success rates for OCR capture are increasing. ICR can also read a document from a file, eliminating the need for scanning. Invoices can be processed direct from a mailbox generating significant savings on the resource required for managing incoming invoices.

Once invoice data has been extracted through the scanning process, this can be delivered direct to your invoice matching solution, eliminating manual invoice entry.

So, if you have been put off in the past by the bad press around OCR success rates, have a look again at the technological advances.

Don’t be put off by “failure rates”. Realistically, be prepared for not achieving 100% capture rates. However, if you can achieve 80% capture once the technology is embedded you will definitely see a benefit of reduced processing times and costs in the long term.

Supplier Portals

Many P2P system providers are now embedding supplier portals in their offering. A supplier portal is a great way to communicate with your suppliers and has several key benefits for an AP team:

Electronic submission of POs – allows a supplier to send acknowledgements electronically PO Flip – allows a supplier to turn a PO into an invoice resulting in an increase in first time

pass rate Supplier self-service – suppliers can access an up to date view of their invoice status and

retrieve payment dates for paid invoices Invoice submission – driving submission of invoicing through a supplier portal will reduce the

risk of missing invoices Supplier communications – all communications can be made through the portal, reducing

supplier calls chasing payments, ensuring accurate history of communications can be maintained and allowing procurement teams, AP teams and suppliers to literally be on the same page

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Pillar 3 – Controls

Data Entry Controls

There are some very easy steps that can be put in place for ensuring invoice entry errors are minimised:

Standard invoice entry rules – ensuring all AP team members are following the same guidelines e.g.

o How to handle spaces in invoice numberso How to handle special characters in invoice numberso What to do if the invoice number has been used before for the same suppliero How to handle invoice correction document entry

Manual entry checks – ensure all manually entered invoices are validated at a point in the process either after entry or within an approval process by checking the following:

o Invoice dateo Supplier accounto Supplier invoice numbero Invoice valueso Currency

Duplicate invoicing identification – implementing processes to capture duplicate invoices at entry stage can ensure the payment does not leave the business.

Approval and Reconciliation

Invoice and PO approvals – ensuring multiple layers of approval are in place throughout the process can eliminate the risk of internal fraud

Ensure supplier statements are reconciled regularly to identify variances between your account and that of the supplier

If you make pro-forma payments, ensure a robust process is in place for managing the final invoice when received to reduce the risk of paying twice

Payment Controls

The sending of the supplier payment is the last opportunity to identify issues before the money leaves the company. A controlled payments process should consider the following:

Segregation – ensure your payments staff cannot perform the end to end AP process allowing them access to all stages of invoice and payment processing

Supplier master data auditing – auditing of all supplier bank detail changes outside of the AP team is an increased control

Payment approvals – ensure that a payment approval structure is in place and is reviewed and updated periodically

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Pillar 4 - Review

Ensure you monitor the key metrics for AP where possible:o Invoice pass rates and volumeso Cost per invoiceo Processing and approval timeso Aged creditor balanceso Payment on time

Create regular management reportingo How quickly are invoices approved?o What are the invoice volumes?o What are the outstanding queries?

Understand the data and use it to identify areas for improvemento Performance management:

Team Department Company

The Accounts Payable team have an abundance of data at their fingertips. Use it for doing good!

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The Roof – Great Management

BE AN AP ADVOCATE

Being an Accounts Payable Manager can now be an exciting and rewarding career choice. There have been so many changes in the P2P arena in recent years which has made AP a great place to work. There are fantastic opportunities to implement business wide change through system implementation and development , automation and business partnering.

Here are a few of the things I do to inspire, motivate and develop my AP team:

WEEKLY COMPETITIONS – Just a little bit of fun with the prize of an hour early finish, this can create a bit of excitement in the team and they are also learning new things:

CELEBRATE SUCCESS – Have a bit of fun sometimes with celebrating the great achievements of the team

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CREATE A RECOGNITION ENVIRONMENT – We have had several initiatives for team members to recognise each other. This is one of them.

INVEST IN DEVELOPMENT – Creating a development plan will help to retain great people.

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Keeping Abreast of P2P

Once you have achieved excellence in Accounts Payable, don’t let it slip!

Resources

http://www.p2pnetwork.org/

http://www.sharedserviceslink.com/

http://www.financialops.org/

And don’t forget to look out for events:

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