Accounting Best Practices, Fifth Edition

Summary

This chapter itemized a number of best practices that can be used to vastly streamline the accounts payable function, one of the most labor-intensive accounting functions. Of all the functional areas, this is the one that can yield the most impressive productivity gains with the use of best practices.

One can select a series of small and simple changes, such as using signature stamps and auditing expense reports, to make incremental improvements in the accounts payable process. However, this is an area where massive gains are possible if a controller is willing to completely restructure the traditional accounts payable processing approach. To this end, the most important best practice listed in this chapter is that of paying upon receiving approval—the receiving staff authorizes payment simply by looking up all items received in an on-line database of open purchase orders. No further work is required by the accounts payable staff, resulting in a major reduction in the accounting workload. However, this approach requires new computer systems, as well as a complete retraining of the receiving staff regarding their role in paying suppliers. Only through such paradigm shifts can an accounts payable staff achieve sensational productivity improvements.