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Accounts Payable Best Practices
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some local flexibility. This is a very good best practice to implement if a com-
pany has multiple locations.
Cost: Installation time:
3–19 ISSUE STANDARD ACCOUNT CODE LIST

Accounts payable can be a difficult area in which to replace employees while still
experiencing high levels of productivity. The problem is caused by the time it
takes a new person to learn the accounts to which invoices should be coded. Even
when experienced accounts payable clerks are hired, they still must memorize the
account codes, which will slow them down considerably. Even an experienced,
long-term employee may occasionally misdirect a supplier invoice to the wrong
account, so some solution is necessary to resolve the issue.
The easiest way to resolve the problem is to reduce the chart of accounts (which
can be a very lengthy document) down to a single page of key accounts to which
invoices are to be coded. Most invoices can be applied to a very small number of
accounts, so this is usually a very viable option. When the shortened list is posted
at each accounts payable clerk’s desk, it becomes a simple reference tool for finding
the correct account, which improves productivity while reducing the error rate.
A more sophisticated way to resolve the problem is to encode the accounting
software with an account number for each supplier. Under this method, the clerk
does not have to worry about the account to which anything should be coded
because the computer already contains the information. However, there are two
problems with this approach. One is that some software packages do not contain
this information, and expensive programming is necessary to install it. The second
problem is that the account code may change, depending on what the supplier is
billing. Given the trend toward supplier consolidation, it is increasingly likely
that a company will go to one supplier for a wide range of products and services,
so that several account codes may apply to a single supplier.
A simple list of approved account codes is an easy way to improve the pro-
ductivity and reduce the error rate of the accounts payable staff, especially that of
new employees.

Cost: Installation time:

3–20 LINK SUPPLIER REQUESTS TO THE ACCOUNTS
PAYABLE DATABASE
A significant task for an accounts payable person, especially one working for a
company that pays its bills late, is to answer payment queries from suppliers.
They want to know when their invoices were paid, the amount of the payments,