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Summary
into a small group of highly computer-literate employees who monitor ongoing
automated transactions to ensure that all processing is proceeding in accordance
with expectations. There is very little paper-processing, nor is there much need to
correspond with suppliers. This is the accounts payable function of the future.
The combination of these best practices is noted in Exhibit 3.4.
Though the system advocated in this exhibit is certainly the most efficient one
of all the combinations of best practices presented in this section, it is important to
note that it is not for everyone. It requires substantial implementation time and cost;
accordingly, it may not be practicable for smaller companies that are operating on
a limited budget. In these cases, other combinations of best practices can be used
to create a system that is somewhat less efficient, but at a much lower cost.

SUMMARY
This chapter itemized a number of best practices that can be used to vastly
streamline the accounts payable function, one of the most labor-intensive
accounting functions. Of all the functional areas, this is the one that can yield the
most impressive productivity gains with the use of best practices.
One can select a series of small and simple changes, such as using signature
stamps and auditing expense reports, to make incremental improvements in the
accounts payable process. However, this is an area where massive gains are pos-
sible if a controller is willing to completely restructure the traditional accounts
payable processing approach. To this end, the most important best practice listed
in this chapter is that of paying upon receiving approval—the receiving staff
authorizes payment simply by looking up all items received in an on-line database
of open purchase orders. No further work is required by the accounts payable
staff, resulting in a major reduction in the accounting workload. However, this
approach requires new computer systems, as well as a complete retraining of
the receiving staff regarding their role in paying suppliers. Only through such
paradigm shifts can an accounting department achieve sensational productivity
improvements in the area of accounts payable.