KnowledgeLeader Blog

The accounts payable process is all about how a company pays its bills. For most companies, accounts payable begins with receiving an invoice and ends with issuing payment to the supplier. Usually companies pay invoices on a daily, weekly, or semimonthly basis. In addition to paying invoices, the accounts payable group typically has responsibility for managing accounting policies that affect supplier relationships and cash management.

Companies generally follow a standard set of activities for processing an invoice for payment. The accounts payable staff:

The process of purchasing materials and supplies comprises procedures and activities to acquire goods in the correct quantity and in a timely manner. The process should include how purchases are started (e.g., inventory levels), who is involved and how it is made. In addition, the process covers the communication of purchases to all required areas of the company (e.g., accounting). Inventory management follows and starts from the time inventory purchases are received to the time the inventory is sold to the customer and payment is received.

Inventory planners and managers today find themselves engaged in a delicate balancing act. On one hand, they strive at all costs to stay competitive in a marketplace that continues to demand more customized products and faster delivery services. On the other hand, they are still obliged to keep the actual cost of maintaining such complex inventory down to a minimum. Despite the dilemma, however, companies that apply best practices know firsthand how an efficient inventory management system can transform a business. Some have even reported improvements of up to 90 percent in throughput times and defect levels.

One of our leading practices to consider for your accounts payable process is to develop strategic business alliances with suppliers and involve them in developing better ways to process accounts payable.

Outsourcing has become a keystone of major business operations to the point that it’s almost a given that large companies will move certain expensive business processes and labor-intensive activities to a third-party. Is this always the best option?