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Total Impact of Best Practices on the Accounts Payable Function
end with a series of irate collection calls. At some point, the accounting staff may
feel that the cost savings from taking the deduction was not worth the effort
required to convince the supplier of the reasoning behind it.
This issue can be solved to some extent by checking off a box on a standard
adjustment letter and mailing the letter to the supplier. The letter should note the
invoice number that is at issue, as well as a series of common problems that
caused the short payment to be made. The accounting staff can quickly check off
the appropriate box and mail it out, using far less time than would be required to
construct a formal, customized letter of notification. The letter should contain
space for a free-form written description of the issue, in case it is a unique one
not covered by any of the standard explanations already listed on the letter.

Cost: Installation time:

TOTAL IMPACT OF BEST PRACTICES ON THE ACCOUNTS
PAYABLE FUNCTION
The preceding list of accounts payable best practices is too voluminous and over-
lapping for a company to install all of them—in fact, there is no need to do so. If
a small number of the most radical changes are implemented, such as using the
receiving personnel to approve payments to suppliers, many of the other practices
are rendered ineffective. Accordingly, this section does not attempt to describe
the impact of all the best practices. Instead, it assumes that all of the changes
requiring considerable reengineering are implemented, since they have the most
impact on the efficiency and effectiveness of the department. This leaves a much
smaller number of additional best practices to be tacked on to make a truly world-
class accounts payable function.
As just noted, the most important and far-reaching item to install is approval
of payment at the receiving dock by the receiving staff. This best practice negates
a number of incremental improvements to the accounts payable function, such as
automated three-way matching and digitizing accounts payable documents. Once
that improvement is made, the remaining best practices for the new accounts
payable functions are primarily those that deal with special payment situations
that will not be routed through the receiving dock. For example, expense reports
and repetitive payments should be automated. The number of payments can also
be reduced by using procurement cards to consolidate the number of billings
received, while blanket purchase orders are useful for shrinking the number of pur-
chase orders in the system. Another piece of automation is the use of wire trans-
fers, which avoids the time-consuming process of creating, signing, and mailing
checks. Suppliers can also be linked directly to the accounts payable database to see
if payments have been made, which avoids any regular need for the suppliers to talk
to the staff. When taken together, the accounts payable function is transformed