WHY IS AP WORKFLOW SO VALUABLE TO AN ACCOUNTS PAYABLE DEPARTMENT?

I believe it’s like the rudder for a boat or wings for a plane. Without it, an AP Department can be lacking in direction and could easily get into murky water and lose its way. AP workflow keeps an AP Department on the right course.

For many Organizations without the proper direction to follow could lead to disastrous results. On the other hand with the right insights and directions can lead to a higher ROI and a thriving Accounts Payable Department.
Now you’re probably wondering is there some kind of magical formula that can bring an AP Department to a “business panacea”. I’m not suggesting that all of your problem’s and troubles are going to disappear, but what I am suggesting is that with some hard work and proper training success is eminent.

Before an AP Department can be proficient in AP Workflow it first needs to answer five questions. These questions are especially important when you are talking about Non PO Invoices.

1. WHAT INVOICES REQUIRE APPROVAL WORKFLOW?
2. HOW DO YOU START THE WORKFLOW?
3. WHEN DO YOU ROUTE TO THE NEXT APPROVER?
4. WHEN DO INVOICES STOP WORKFLOW OR ARE FINALLY APPROVED?
5. HOW DO YOU DEAL WITH EXCEPTION/SPECIAL CASE WORKFLOW?

When these questions have been answered AP Workflow can begin to help an organization to improve its course of direction with a smoother and quicker flow of information.

Here are some other features that can be of help:

  • USE A SIMPLE KEY – THE VAST MAJORITY OF INVOICES SHOULD ENTER THE ORGANIZATION USING A SIMPLE KEY. EITHER REQUESTOR, BUYER, LOCATION OR SOME OTHER VALUE THAT THE SUPPLIER MAY KNOW. RELATE THIS KEY TO THE STARTING POINT IN THE ORGANIZATION.
  • HIERARCHY APPROVAL REPORTING – UTILIZE SOME KIND OF HIERARCHY TO ADVANCE INVOICES ALONG THE ROUTE AS NEEDED FOR ADDITIONAL APPROVALS. THIS MAY BE REPORTING STRUCTURE BASED OR BUSINESS RULE BASED. 80% OF INVOICES SHOULD FOLLOW THIS STRUCTURE WITHOUT FAIL.
  • UTILIZE MATRIX APPROVAL LIMITS – TO DETERMINE WHEN AN INVOICE IS FINALLY APPROVED FOR PAYMENT. APPROVERS HELP EXPEDITE WORKFLOW.
  • LIMIT REVIEWS OF INVOICES TO ACTUAL TROUBLE SUPPLIERS, BUSINESS UNITS OR SPEND.

All of this is dramatically improved if you are using technology to automate this process. By automating, all of your business rules that you have put in place are electronically codified into an application that must be adhered to. This process will speed up your approvals to under four days in most cases. Now with all of these issues being addressed makes it paramount that AP Workflow is set up properly in order to solidify a successful Accounts Payable Department.