Sounds simple, right?  The obvious process would be to just send invoices to AP, let them do their magic and next thing you know a payment shows up at your mailbox.  Yet despite this seemingly simple process, many invoices still fail to follow the preferred route. Instead, they are sent to buyers, buyers’ departments, or even to the organization’s mailbox, email address or fax.

Why Does This Happen?

Since sending all invoices directly to AP doesn’t seem, on its face, to be a difficult or unreasonable request, why is it that vendors so often do not follow through with the action that was requested?

In some cases, the vendor is unaware of the policy and sends the invoice to the person buying the goods or services. However, the most common reason is that the people who buy the goods or services ask the vendor to send them the invoice. This is fine but the vendor should also send a copy of the invoice to AP.

What Can Be Done?

To address this issue, start by ensuring your AR department knows your customer’s correct address, e-mail address or fax number. A quick call to verify the correct information can save a lot of time and trouble collecting down the road.

Your Accounts Payable department needs to do their job to be efficient too. They need to work with your vendors to ensure the policy of “send invoices to AP” is followed.  If not, the AP staff will find themselves answering vendor calls looking for payment for invoices that have never arrived in AP. Consider each and every one of these calls as an opportunity to retrain the vendor. Remind the vendor of the policy, and point out that if they had followed it as requested they would probably have already received their payment.

Repeat as Necessary

The AP Department needs to remember a vendor won’t change their ways immediately but continued reinforcement will eventually lead to the desired change. Although getting to 100 percent may not be achievable in some organizations, you will certainly make progress.

Take a hard line approach with your vendors

Take any discount on the appropriate day after receipt in AP. If the vendor calls requesting that the discount be paid back as unearned, re-educate the vendor. Stress that the invoice is essentially not received until it reaches AP, so it is only logical that the AP receipt date be the day when the discount clock starts.  This stance may result in a disgruntled vendor, so you might want to reserve it for a vendor who repeatedly violates the policy.

So the take away is your organization can improve efficiency in AP by training vendors to send invoices to the correct place. The AR department can learn a lesson too – send invoices to AP!