don’t settle for how you’ve always done it: tips and tricks for … · 2019-12-04 · work done...

October 15-17, 2019 | Westin Kierland Resort | Scottsdale/Phoenix, AZ

Don’t Settle For How You’ve Always Done It: Tips and Tricks for Holistic AP Process Reviews

Pam Miller


AP Process Review

Pam Miller : : Senior Trainer : : IOFM


What is an AP Process Review?• A look at all the tasks performed in AP

– At the entire end-to-end process

• And who performs them

• And where they are performed

• And how they are performed

• Many AP departments hire an

outsider to do this

• But you can do it yourself– Just keep an open mind– And leave your preconceived notions regarding AP behind


Why Do an AP Process Review?

• Many AP departments do things the way they have evolved which is not necessarily the best or even the next best way

• Many AP departments have developed lots of “workarounds” under pressure to get the work done rather than fix the underlying problems

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Why? continued

• Many AP departments want to move forward with automation so need a baseline of the current state in order to build a business case for the desired automation

• And rule number one when

implementing technology is

“never automate a bad process.”


Begin at the Beginning• Discuss the plan with your superiors

– This process will take time and resources

– What’s important to them?

• Cash flow? Discounts? Head count? Cycle time? Reducing borrowing?

• Identify their pain points vis-à-vis AP

• Ask for suggestions for improvements

• Recruit a sponsor

– It’s a good idea to work under someone’s auspices

• Gain cooperation from other departments

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Begin, continued• Consider surveying (all of) AP’s customers – internal

and external

– Find out what they think AP’s weaknesses – and strengths – are

• The results may surprise you

• Gain buy-in from AP staff

– They need to understand the purpose

of the review

– Solicit their input and ideas

– Calm their fears about ulterior motives

• Cast aside preconceived notions


Steps to Success• Gather data

– Documentation– Interviews with stakeholders– Survey results

• Observe processes• Analyze • Brainstorm• Prioritize ideas for improvement• Set up a timeline for change• Review at the 3 month point• Review at the 6 month point

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Areas to Review• Staffing levels and

organization• Metrics• Incoming

– Mail handling– Invoice processing

• Outgoing– Payment processing– Payment distribution

• T&E processing• Exception handling• Vendor file

– Management of or interface with

• Pcard• Compliance

– Controls– 1099– Tax– Escheatment

• Customer service– Internal– Vendors

• Vendor statement handling– Including credit balances

• Records management• Project management

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Gather Documentation – the How• AP policies & procedures manual

• Desk manuals

• Other assorted notes kept by staffers

• T&E policies & procedures manual

• Purchasing policies & procedures manual

• p-card policies & procedures manual

• SOX documentation

• Process maps

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Gather Documentation – Tools

• Spreadsheets (like for uploading, tracking)

• Software

– What is being used?

– How is it being used?

• Forms

– Paper and web-based

• Instructions on forms

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Forms Such As…

• Cover sheets or distribution forms

• Check request form

• Wire form

• ACH enrollment form

• Vendor add and/or change form

• Expense report form

• p-card related forms– Application

– Lost receipt form

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Forms, continued

• Stop payment request form

• Void check form

• Petty cash related forms

– Requests for a fund or changing the amount of the fund

– Replenishment requests

• Checklists

• Cheat sheets


Gather Documentation – The Who

• Mission statement (organization and AP)

• Organizational chart

• Job descriptions

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Gather Documentation – the How Much & How Well

• Metrics

– How many invoices?

• What kind?

– How many payments?

• What kind?

– How long does it take to process the average invoice?

• Exceptions – how many invoices cannot be processed directly?

– Missing or incorrect PO

– Pricing discrepancy

– No or inactive vendor

– Missing or incorrect coding

– Missing approval

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Documentation, continued

• Errors – what kind of errors are common & why?– Duplicates paid

– Wrong vendor paid

• How many invoices are paid late?– Discounts earned and/or charged back?

• Audit reports and comments

• Survey results

• Interview notes


Interviewing Stakeholders – Who?

• AP Director

• AP Manager

• AP Supervisor

• AP Leads

• AP staffers

• CFO

• Controller

• Internal Audit

• Purchasing

• Receiving

• Treasury

• Accounting/GL

• Tax

• IT support

• Legal

• Vendor(s)

• Business unit/customers

• Traveler(s)

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Create and Distribute Surveys

• Anonymous vs. not anonymous

• Don’t just ask, “How is AP doing?”

• Provide a scale such as 1-5 with 1 being completely unsatisfied and 5 being completely satisfied

• Ask about payments/reimbursements being received in a timely manner

• Try to determine if people know what they must do in order to get paid

– Proper forms, approvals, etc.

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Surveys, continued• Ask whether they think AP provides the information they

require in order to complete their tasks

– Remittance information, reporting, etc.• Find out if they know who their AP contact is• Are they aware of AP’s payment schedule

and/or cut-off times• Does the AP fee schedule make sense?• How would you rate AP’s performance overall?• Ask them to offer suggestions to help AP improve

performance– Allow free form text response


Sample Vendor Satisfaction Survey

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• VENDOR SATISFACTION SURVEY• Please specify the number that best describes your satisfaction with Accounts Payable's service.• 1. Very Dissatisfied• 2. Somewhat Dissatisfied• 3. Somewhat Satisfied• 4. Satisfied• 5. Very Satisfied• Element Rating• Timeliness of payments __________• Accurate and sufficient information for you to post transactions __________• Prompt responses to your Inquiries __________• Understanding how to do business with us __________• Our adherence to Contract/P.O. terms and conditions __________• Overall service provided by AP __________• What are some of the positive things we are doing?• ___________________________________________________________________________________________• ___________________________________________________________________________________________• What do we need to do differently?• ___________________________________________________________________________________________• ___________________________________________________________________________________________• Comments and Suggestions:• ___________________________________________________________________________________________• ___________________________________________________________________________________________


Sample Purchasing Cardholder Survey

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• PURCHASING CARD PROGRAM CARDHOLDER SATISFACTION SURVEY• To help us improve the p-card program, please fill out this survey and return it to [name] by [date].• Name of Dept./Business Unit: ______________________________________• Name of Purchasing Officer: __________________________________• Name of Purchasing Card Coordinator: _____________________________________• Please answer all of the following questions as it relates to your department or business unit:• 1. How many cards have been issued in your department/business unit? ______• 2. What is the approximate annual dollar volume of your p-cards? $____________• 3. What do you anticipate as the growth in terms of annual dollar volume? $_____________• 4. What policies and procedures have worked well for your p-card operations?• ________________________________________________________________________• 5. What policies and procedures have NOT worked well for your p-card operations?• ________________________________________________________________________• 6. What would you change about the p-card program to make it better?• ________________________________________________________________________• 7. What improvements to the p-card program would benefit your area’s cardholders?• ________________________________________________________________________• 8. What improvements to the p-card program would benefit your area’s p-card coordinator?• ________________________________________________________________________


Sample Customer Satisfaction Survey

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• ACCOUNTS PAYABLE CUSTOMER SATISFACTION SURVEY

• Your input is very important to us and will help accounts payable improve the service we offer you.

• Please use the following rating scale when answering the questions.

• 4 = Exceeds expectations 2 = Partially meets expectations

• 3 = Meets expectations 1 = Does not meet expectations

• 1. Please check the appropriate box: are you an:

• ■ employee (Dept: _____________ ) ■ outside vendor

• 2. Rate your overall experience with the department? _________ (use rating scale)

• 3. How do you most often interact with accounts payable?

• ■ in person ■ by telephone ■ by e-mail ■ other _____________

• 4. Are your questions, issues, or concerns resolved:

• ■ immediately ■ within two days ■ one week ■ more than one week

• 5. Have you ever used the accounts payable hotline to request information?

• ■ yes ■ no ■ frequently ■ infrequently ■ not sure

• 6. How would you rate the service provided by the hotline? (use rating scale)

• a.) response time _______ b.) ease of use _______ c.) accuracy ______

• 7. When contacting accounts payable, what questions or issues do you most commonly have?

• ___________________________________________________• 8. In general, how would you rate the service provided by accounts

payable? (use rating scale)• promptness ________ courtesy ________ knowledge ________• accuracy ________ follow-up ________ helpful ________• Member Tools & Resources• Copyright 2011 IOFM• 9. Suggestions as to how accounts payable can better serve your

needs:• ___________________________________________________• ___________________________________________________• Thank you for taking the time to participate in this survey. If you

wish, you can fill out your• personal information below, but it is optional.• Name:

___________________________________________________• Company name:

___________________________________________________• Address:

___________________________________________________• ___________________________________________________• Phone no./E-mail:

___________________________________________________• Please return this survey to:

_________________________________________________


What to Ask in the Interview Process –Non AP

• Start with the information requested on the survey• Tailor it to the position of the person

being interviewed• Refrain from asking questions that can

be answered “yes” or “no”-- Use “and”

• Ask them to describe their dealings with AP

• Be sure to ask for suggestions on how AP could do things better

• Don’t get defensive – some of the criticisms might not be fair or even correct – you need to know what misconceptions are out there in order to educate

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What to Ask in the Interview Process –AP

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• Tailor it to the position of the person being interviewed• Refrain from asking questions that can be answered “yes”

or “no”– Use “and”

• Ask them to describe what they do• Ask about things that never get done – the

things that always go to the bottom of the“to-do” list or the bottom of the inbox

• Ask about the things they think are dumb,repetitive, or just unnecessary

• Ask about any improvements they have made on their own– Even those that no one else, especially supervisors, know about

• Ask what they would change and why


What to Observe

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• How do invoices arrive?• Sorting, distributing• Vendor adds and changes• Invoice processing• Credits• Expense report

processing• Vendor statements• Accruals• How are payments made?• How are payments

distributed?

• Matching – processing PO invoices

• Processing non-PO invoices

• Approval process• Exception process• Customer service –

internal and external (vendor)

• Use of technology• Close of day• Close of month


Pay Special Attention to Exception Processing

• What types of errors are most common?• Who makes them?• Why are they made?• Are there patterns or trends?• Do the errors reside within AP?• Or are other departments or vendors

causing the exceptions?• What are the steps taken to resolve exceptions?• Are different types of exceptions handled differently?• How?• Why?

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Review Status & Use of Current Systems

• What system(s) are being used to do what?

• Do these systems interface?– How?

• Is the input process optimized?

• Is the output process optimized?

• What types of reports are readily available?– Are they useful?

– Are they being used?

• Gap analysis

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Review the Organization of the AP Department

• Does the organization of AP meet the department’s needs?

– The organization’s needs?

• Based on the organization of the AP department, who appears to be the most important customer(s)?

– Is that customer really the most important? Should they be?

• Do supervisors have the right number of reports to supervise effectively?

• Do the staffers have enough and the right training?

• Interface between AP and other

departments

– Weak points

– Strong points

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Look at Process Flows

• Does the overall process flow make sense?– Within AP?– Into AP?– Out of AP?

• Where are the bottlenecks?– Within AP?– Into AP?– Out of AP?

• If there isn’t a process map or if it is outdated, create one – Great group project

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Look at Controls• Purchasing related

– Creating, changing, canceling POs– Pricing & quantity discrepancies– Vendor disputes

• Invoice handling related– Duplicate avoidance– Handling of invoice copies

• Payments related– Creating checks, rush checks, wires, ACH payments,

use of the pcard– Terms, discounts, reversals, stops & reissues, returned

checks, bank recons

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Controls, continued

• Vendor related

– Entering, changing, deactivating and/or purging

– Quality of information contained in the file

– Duplicate avoidance techniques

• Compliance

– Segregation of duties

– 1099 and 1042S, FATCA

– OFAC, SOX, HIPAA

– Sales and use tax, VAT


Time to Analyze Documentation & Observation Notes

• Look for outdated– Policies & procedures– Forms

• Look for steps that don’t make sense• Look at rules for exception handling• Look for discrepancies between the

documentation and the way things work in real life• Assess the improvements/workarounds/special

techniques that have been shared• Assess validity of systems issues

– Training issues or problems that should be addressed

• Review meaningfulness/usefulness of metrics kept

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Target Weaknesses & Inconsistencies

• Poor quality invoices arriving in AP• Invoices arriving in AP after due date or never• Bottlenecks• Errors & exceptions• Gaps• Controls – segregation of duties• How many different processes

are there?– Is that the right number?

• Do different staffers do the same task in different ways?• Interface with other departments or vendors in

different ways?

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Where Could Automation Help?• What can be gained by adding, increasing, or altering the mix

of technology?

• For a completely manual process

– Eliminate or decrease the paper

– Would imaging be a good fit? e-invoicing?

• Back end imaging already?

– Front end imaging offers more

benefits than back end imaging

• Front end imaging already?

– Should OCR be introduced?

– Would e-invoicing be a good addition?

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Where Could Automation Help? (continued)

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• What about workflow?

– Already in place?

– Optimized?

– If not, why not?

• Would a complete P2P solution be the right fit?

• Don’t forget about automation on the pay side

– ACH

– p-cards


Where Could Automation Help?(continued)

• Already using EDI?

– Should it be extended?

– Should it be phased out in favor of e-invoicing?

– If not, is it a good fit?

• Already implemented e-invoicing?

– How successful has vendor conversion been?

– Should conversion efforts been increased?

– Should imaging be added?

– If not, is it a good fit?


How Do you Know if it’s a Good Fit?

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• How many invoices, what kind, and how do they arrive?

– Mostly PO invoices – optimizing the rules for automated matching is beneficial

– Mostly non PO invoices – workflow can improve the approval process

• What does your vendor population look like?

– Cooperative?

– Demanding you use their technology?

– Tech savvy?

• Are you likely to get approval/support to mandate e-invoicing for vendors?

• What technologies do you see similar companies or competitors using?


Organize, Prioritize, Present Findings and Generate Plans

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• Discuss findings and seek input in terms of prioritization and implementation plans– Within AP

– With superiors

– With sponsor

• Seek support for implementing

automation projects or other improvements

that require changes on the part of those outside of AP

• Generate a written analysis/report

• Create a timeline for implementation– With deadlines


Where Do We Go From Here?• Quick hits

– Easy, little to no cost• Creating email boxes to separate invoices from inquiries • Creating email groups to facilitate communication• Reworking forms to make them easier to use

– Vendor add form in order of fields in system• Training

• Things to do in 3 months– Not quite so easy, not quite so cheap – may

require those outside of AP to make some changes• Moving some vendors to ACH from check • Creating macros

• Things to do in 6 months• Things to do that will take longer• Reassess at intervals to ensure progress is being made

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Pam Miller, Senior Trainer, IOFM

[email protected]

don’t settle for how you’ve always done it: tips and tricks for … · 2019-12-04 · work done...

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