I’m sometimes asked what is the best practice for accounts payable workflow.
And I always say, there isn’t one.
Which might seem odd since accounts payable has been around for centuries- and in its present form for decades.
Yet we don’t have best practice for accounts payable workflow. We don’t even have a standard accounts payable workflow.
So how on earth can we measure to make sure we’ve optimised the process?
Why there’s no standard best practice for accounts payable
Before we tackle that one, let’s take a look at why there isn’t a standard for accounts payable best practice.
It’s because of the nature of accounts payable – it has to respond to the needs of the organisation it serves. As the management and nature of the organisation change, so must the accounts payable processes.
Often a new manager changes the processes in a minor way to suit themselves or to fit product, division, auditor or parent company requirements. Over time, these minor changes create a bespoke workflow – like no other in any other business.
Sometimes management directs the changes without any understanding of the accounts payable processes to suit some other perceived requirement. The results are seldom beneficial to the organisation and cause considerable disruption within the accounts payable department.
The design of most accounts payable procedures has two aims. Firstly to ensure timely invoice payment. Secondly, the right person should authorise the correct amount to be paid. Few organisations take the time and effort to measure the cost to process those invoices. Without that measure any changes to procedure aren’t measured either and no one can tell if they’re helping or hurting.
Management by legend
It all gets worse over time. New staff and managers come on board and older workers retire. No one can say why certain processes are done the way they are other than, “It’s always been done this way.”
But without top management devoting the time and resources to take a high level review of the processes with the goal of measuring the processes and eliminating inefficient procedures, things won’t get any better any time soon.
And neither will the organisation’s overall productivity.
