Accounts Payable are the payments a business owes to suppliers for goods or services purchased on credit; a type of short-term debt. Accounts payable are often referred to as "payables." The main objectives in accounts payable management are to:
- minimise processing costs whilst also minimising fraud
- minimise the number of actual payments made (See Netting)
- maximise accuracy and control over when payments are made
- ensure compliance with Sarbanes Oxley, accounting and tax regulations (see Ensuring Control & Compliance)
- ensure maximum VAT/sales tax recovery.
Improving Productivity and Efficiency
The main types of systems and services for improving productivity and efficiency in accounts payable operations are:
- E-invoicing systems and services provide significant opportunities for cost savings and for taking advantage of early payment discounts.
- Imaging and workflow systems and services ensure that invoices and other documents are read/scanned and processed efficiently
- Interactive voice and web response systems for assisting large accounts payable department manage and process their many queries.
Maximising Payment Accuracy and Control
The key tasks in making accounts payable payments are to ensure that:
- payments are for the correct amount and are paid close to the end of the payment term
- there are no overpayments or double payments
- the number of corrected and returned payments is minimised by using accurate lists of bank IBAN and IBIC codes and other data for both domestic and global payment instructions
- credit notes are issued quickly and accurately
- incorrect VAT payments are eliminated.
The best practices for preventing fraud and the main systems and services are listed in Minimizing Payment Fraud.
Outsourcing Accounts Payable
There are many reasons for outsourcing the accounts payable function, such as needing additional expertise or processing capacity. Although outsourcing can bring many benefits, care is needed in Selecting an Outsource Provider from the many suppliers of Accounts Payable services.