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AP Best Practices | Processes
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Following is a discussion of generally proven practices for manual keying of invoices. Steps must be tailored to each company's systems and policies. Creation of a data entry manual is strongly recommended. Consistency in data entry is critical and a handy manual will assist specialists to be consistent both individually and as a group. ...
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The 80/20 rule seems to apply in a host of situations. Twenty percent of the people you know cause 80 percent of your problems. Eighty percent of your time is spent doing 20 percent of your work. You can probably think of more that apply to your experience. So it should come as no surprise that about 80 percent of the invoices that pass through your department comprise about 20 percent of total dollar payments. In other words, your total payment volume is largely made up of small-dollar amounts. Does getting a handle on that volume sound appealing? Following are leading practices for check reduction and handling ...
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An accounts payable (AP) shop has enough to worry about when making payments within the United States. When making international payments, complexity is heightened by issues such as currency, foreign language, customs and regulations. Those involved with international payments should be familiar with the payment methods used ...
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Accounts payable professionals know that discovering more efficient ways to handle invoices is a major goal, and achieving it is never simple. Here are some proven practices for better invoice handling ...
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While AP departments focus on paying invoices as late as possible, accounts receivable departments want payment as soon as possible. What both parties need is a win-win financing scenario.
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Invoices are essential to the accounts payable department's success, right? Wrong. While taking invoices out of the process can be a bit of a culture shock, it can bring significant cost savings.
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Cost reduction is an important lever affecting a company’s bottom line in the best of times, but in a recessionary economy it becomes critical.
Following is a list of 50 cost-saving ideas and best AP practices your organization can start taking right now to streamline processes and lower costs.
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Accounts payable – like all business functions – depends on documents. Electronic document management and retention technology allows AP to manage, archive, retrieve, and – when appropriate – destroy documents.
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In the pursuit of better transaction processing, centralization is a first step. Centralizing into a shared services center has been a goal of many large organizations and is a fait accompli by many. But the shared services story, as it relates to reducing payables cost, is a short term story, argues David Hay, director of shared services operations for Hewlett Packard. "You really can't drive ultimate costs out of shared services ..."
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Many companies have spent considerable effort on automating and refining their purchase-to-pay (P2P) process. Two long-standing, well-documented best practices in this area are mandating consistent purchase order (PO) use and minimizing the number of non-PO transactions processed by accounts payable. This report examines world-class companies and their purchasing policies, as well as how they manage non-PO-based transactions. The analysis includes a review of a number of emerging best practices that can impact the effectiveness and efficiency of the P2P process, as uncovered in a recent survey conducted by The Accounts Payable Network (TAPN) and The Hackett Group (THG) ...
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A letter of credit (LC) is a document issued by a bank or other financial institution on behalf of one of its clients, called the "applicant." The letter is effectively a guarantee of payment to another party-a vendor, for example-called the "beneficiary." The beneficiary is named in the LC. For example, your company might need to issue an LC to an overseas vendor to cover the cost of goods you expect to purchase. In this case, your bank or lending institution would set up the LC with your firm as the applicant – the company that wants to send money – and your vendor as the beneficiary – the company that wants to receive the money. Why use an LC? ...
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Evaluated Receipt Settlement (ERS) is a methodology that eliminates the supplier invoice from the procurement-to-disbursement process. It is also called auto-payment, and utilized a two-way rather than a three-way match. It is most commonly used in the manufacturing industry between established trading partners. In an ERS transaction, the supplier issues an advanced shipping notice (ASN) based on a purchase order or contract from the purchaser, then ships the goods. The purchaser, upon receipt of the shipment, confirms it against the purchase order, verifies the items and quantity and pays the supplier. Fundamentally ERS determines disbursements based on purchase orders and receiving information. ...
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Today, such technology as T&E- and procurement-cards eliminate much of the need for a petty-cash box. Nevertheless, many companies retain a petty cash stash. Companies that do may give that responsibility to the accounts payable (AP) department. An AP manager may want to aggressively discourage its use, but if your department is assigned the job, here are proven practices to guide you.
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The potential for accounts payable (AP) payment errors is present in any shop, and the consequences are costly. In the worst case, a company loses the money associated with making a duplicate or over-payment, but even if the error is discovered and the payment recovered, the company has lost the interest on that money as well as the time and labor consumed by the recovery process. What causes payment errors? ...
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The main focus of accounts payable is paying vendor invoices, of course. But what happens when it is the vendor who owes you, rather than the other way around? This menacing problem is called a debit balance.
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Wednesday, Sep 8 2010
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