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Accounts Payable Best Practices
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expense reports being submitted before anyone tries to implement the concept.
These software packages are quite expensive. A package that is hosted on the
Internet, with a dedicated line to the customer, could cost as little as $35,000,
while a full-blown installation at a large company could cost as much as
$500,000.
The logical flow of automated expense reporting is noted in the following
process. The key issue here is that all employees must have direct access to the
program, so it can respond to their expense entries as soon as they make them.
This requires on-line access by anyone who will use the program, which means
that every user not only must have access to a computer or terminal, but probably
also have a modem for dial-in access. One must consider these hardware costs as
well as the previously noted software costs before implementing this best prac-
tice. The processing steps are as follows:

1. The user accesses an on-line expense reporting form that is linked to the cen-
tral expense reporting software and database.
2. The user enters expenses by date and category.
3. The software reviews all expenses as entered and flags those that are not
allowable. It rejects these and notifies the user, along with an explanation.
4. The software reviews all remaining expenses and decides which items
require a back-up receipt.
5. The user prints out a transmittal form that details all required receipts and
that also contains a unique transmittal number that is linked to the expense
report that was just entered into the computer.
6. Upon completion by the user, the electronic expense report is routed by e-mail
to the user’s supervisor, who electronically approves or rejects the report. If
rejected, the supervisor can note the problem on the expense report, which is
then routed back to the user for resubmission.
7. The user attaches all receipts to the transmittal form and mails it to the
accounts payable department.
8. When the accounts payable department receives the transmittal form and
receipts, it verifies that all receipts are included and that the expense report
has been approved by the supervisor, and then approves the entire package.
9. Upon approval by the accounts payable staff, the expense report is immedi-
ately paid by wire transfer to the bank account of the user.
10. The transmittal form and receipts are filed.

These detailed steps are shown in graphical form in Exhibit 3.3. Though there
appear to be more steps in the automated process than there are in a traditional
process, the extra steps are automatic or much simpler. The overall result is far
less processing time, as well as a significant reduction in the time needed before
an employee is paid.