When it comes to getting bills paid, organizational processes are as varied as the companies themselves. Many of the methods employed are reflective of overarching goals or mindsets. For example: an organization with a “no late fee” mentality will operate much differently than a “question every charge” mentality. Each of these organizations will differ from the entity that prioritizes vendors based on certain factors. Like many processes in the modern organization, there is not much room for “that’s the way we’ve always done it,” type thinking when it comes to getting bills paid effectively and efficiently. Below are three questions that every accounting department should be asking as it seeks the perfect payment process.
- What’s our approval process look like? In some organizations, there is a personal approval that must be given for each and every invoice that comes into the accounting system. This makes a great deal of sense on the surface, after all, who wants to pay for non-authorized products or services? There are a few potential problems with this approach though:
- It can easily become something of a rubber stamp, as there are simply too many invoices for the designated approver to mindfully review.
- As long as recurring charges look the same from month to month, the invoices get approved, even though the starting point for accuracy is not understood or validated.
- The time involved in getting the proper approval doesn’t usually take into account the different payment terms: Net 10, Net 15, Net 30, etc. In other words, without sophisticated software, every invoice ends up getting routed the same way, though the terms can vary widely.
- Getting bills paid on time could be one metric.
- Getting bills paid on time in a fashion that maximizes vendor rebates might be another metric.
- Paying bills on time, maximizing vendor rebates, and minimizing the total number of “touches” might be another.
In September of 2016, Juvo Technologies purchased Vendorin, a B2B payment optimization company based out of Omaha. At the time of that acquisition, Vendorin’s marketing materials included language centered around the idea of “Delivering the Perfect Payment.” While much has changed since the acquisition, the idea of a “perfect payment” is something that continues to drive both companies. While “perfect” might never be attainable, there are controls, systems, and processes that can be implemented that can drastically change how the traditional AP department operates.