Accounts Payables: Best Practices to Improve Your Operations

As one of my business school professors used to say, business processes, even in the biggest of organizations, often do not run at more than 30% efficiency. There is always scope for improvement, and with the assistance of technology, organizations today can improve their business processes significantly.

One way to do this is to adopt the best practices in these processes and optimize them for maximum efficiency and effectiveness. There are best practices that can be implemented in any process. W will focus on accounts payables in this post. Some of these best practices have been covered here, and this post will expand on them and go into more detail.


Implementing best practices in the workplace is no easy task. For one thing, they need time to show their results. In this daily rut where short-term results are more important than any long-term planning, it is difficult to get buy-in from the stakeholders.

So, the first thing that must change is the culture, where managers and supervisors will need to have a strategic mindset and be willing to forego a little amount of time before reaping the rewards. This is one of the most important barriers. Once the mindset moves to one of change and improvement, the other best practices can be implemented that much more easily.


One of the first steps in improving the AP process is to govern it with a policy. An AP policy details all the different steps in the process and how they are to be followed. The policy also sets the role expectations and accountabilities of all the stakeholders involved in the process. It sets out measures to account for any inconsistencies and deviations.

When policies are set and rules and procedures are sketched out, there is little chance for ad hoc or maverick actions. From telling the AP specialists how to enter the invoice details into the system to laying down the procedures for getting invoices validated and approved, the policy needs to be as detailed as possible for it to be most effective. The policy will also list down the thresholds at which invoices can be approved at which managerial level, and so on. It is essentially the foundational guide on which the whole process will be built. It needs to be robust, while also being flexible to meet the changing needs of the organization.

Invoice Handling

There is a lot of scope for an invoice to be missed or mishandled, intentionally or otherwise. Therefore, this is one of those places where best practices are most important. Once an invoice is received, all the details in the invoice need to be matched with the purchase orders as well as delivery reports. Further, the invoice details need to be matched with all the invoices in the system. Thay way you’ll ensure that duplicates are being weeded out.

Next, it is a good idea to have another matching, resources permitting, this time with the quality inspection team’s report. Only after all these steps have been completed should the invoice be entered into the system. For adequate checks and balances, it is a good idea to have a reinforcing validation procedure, where one individual’s work is validated and approved by another individual.

A Supplier Portal

All organizations would like to closely work with their vendors and suppliers, but not all organizations can achieve this. This level of collaboration cannot be achieved without either providing the suppliers with a portal that they can use to manage their delivery and payment information or integrating the supplier systems with the organization’s systems.

The benefits of having a supplier portal are many. Both parties can track the status of deliveries and payments in real time, and avoid errors and fraudulent practices in processing. Further, since both parties communicate with one another constantly, any issues can be immediately addressed. This portal also acts as a data collection mechanism for organizations. They can use this data to analyze how effective their suppliers are, and which of them are more beneficial to the organization among others.

Digitization/Paperless Processing

Digitization or paperless processing helps organizations avoid many of the pitfalls associated with accounts payables. Pushing paper from one desk to another, waiting for ages before approvals can be completed, and processing rife with errors and fraud are some of the ills that can plague organizations when they use paper processing.

Further, data mining is difficult and time-consuming. So as a result, organizations do away with analytics, which makes them blind to all the inefficiencies. Instead of this chaos and inefficiency, organizations have much to gain from switching to digitization. Digitization takes care of the time-consuming tasks, leaving employees only with supervisorial duties. As a result, AP processes can be run with fewer resources, more efficiently.

Also, since the data is stored in the centralized system, all the pertinent stakeholders have access. And they can all be more informed in their decision-making once they analyze it. Other tasks like approvals also become significantly simpler, with approval now only being a matter of checking a box; the software would already have done the validation.

Accounts Payables Automation

The other best practice, one closely associated with digitization, is automation. Once digitized, all the mundane and repetitive processes can be automated. For example, the software can be programmed to automatically sort incoming invoices. Sorting can be done either according to the sender or according to the payment involved.

Also, the software can help with validations of the accounts payables. It can automatically match the invoice two-way, three-way, or four-way, and flag any inconsistencies for further investigation. Also, can be instructed to automatically apply GL/cost centre/business unit codes. That way it can route the invoices to the appropriate places for approval.

In addition, ensures that everyone is kept in the loop. All the stakeholders are informed with notifications and reminders about their tasks. And since this is automated, there is no scope for miscommunication or communication gaps.

Transparency and visibility

Transparency and visibility should be two of the pillars on which the AP process must be built. When there is a lack of either of them, organizations suffer from multiple issues not limited to fraud and mismanagement. All the business units involved must be transparent in their dealings. And senior management must have complete visibility into all operations for efficient processing.

Also, all deals and transactions with external stakeholders must be transparent in nature and should follow the organizational policy. Transparency and visibility also impact the bottom line, and as such, must be given their adequate importance.

Integration with procurement and vendor systems

Another best practice in AP processing, one that leads to multiple benefits, is the integration of the AP system with the procurement and vendor systems. I already mentioned how a supplier portal could help organizations collaborate more effectively with their suppliers. Another way of doing the same is integrating with their systems so as to enable a seamless and accurate flow of data. This way, a lot could be saved on invoice handling. There will be greater trust generated among the parties, which can lead to favorable deals and discounts.

Further, the AP system also needs to be integrated with the procurement system, with which it needs to work together closely. Since data from the procurement system needs to be accessed in matching, instead of having to manually transfer this data, you can let the integration work its magic. The solutions communicate with one another and automatically transfer the necessary data. Also, since the systems are integrated, you can avoid the issues of data incompatibility. Other integrations could include business intelligence systems, finance and accounting packages, and so on.


For best practices such as the above to be implemented, the first requirement is the change in culture, and the second non-negotiable requirement is the accounts payables software. This business productivity solution forms the basis for many of the best practices to be implemented. Also, it allows organizations to gain more from their existing resources. The software can be employed as a standalone solution or as a component of the wider spend management suite. Which is an integrated platform with different modules for managing different aspects. Technology quintessentially brings about many of the best practices such as centralization and automated workflows. This makes best practice implementation easier and more successful. Ensure you follow the best practices laid out in this article and see how your accounts payables improve over time.

James Maron
James Maron is an author at SutiSoft, Inc. He shares his views on SaaS and Cloud-based business management solutions.
James Maron

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