Streamlining accounting departments can be a daunting task. Sometimes the simplest approach is overlooked, but keeping it simple is usually the best course to streamlining a process. In the case of accounting departments, the best way to improve efficiency is by stop doing something. The something is usually a task which was created a thousand years ago and no one is asking why. Here are some examples of tasks which could have served a purpose at one time, but are really obsolete now.

Saving the return envelopes that often are enclosed with invoices. Simply dispose of these and use your own envelopes for payment. How much money is really saved?  Plus, you will spend more time (and money) trying to find a way to file these envelopes in order to reunite them with the payments.

Stamping the received date on invoices that already contain some kind of received date. I must say, there is a certain satisfaction in using a stamp. Whether you press hard or soft, it is just plain fun but really not necessary. Just about any type of communication process has the date and time it was sent or received. Why go through the extra step of stamping and sorting invoices when you can use your accounting software to do all the hard work?

Requiring approvals for PO-based invoices.  Just what does this additional approval accomplish other than slowing down the process? A properly completed and authorized PO already approves the purchase. The only approval needed at this stage is that the product or service has been accepted and / or completed.

Requiring an exact match between the three documents that comprise the three-way match. Don’t you love accounting? We always feel a need to have everything ticked and tied. In a perfect world, the purchase order, the invoice and the receiving documents would match to the penny every single time. In the real world I live in, a perfect match is not always achieved. Investigating every single discrepancy without regard to the amount adds time and significant expense to the AP process. Often, the cost of investigating the problem exceeds the amount of the discrepancy.

Implement a variance or tolerance limit. Don’t sweat the small stuff. As stated above, we don’t live in a perfect world. Establish a variance limit where both AP and purchasing feel comfortable. Invoices that fail the three-way match but whose discrepancies fall under this limit should be able to move on in the process. Of course, if a particular vendor’s invoices are always incorrect; purchasing should contact that vendor to encourage them to improve their invoicing practices. However, for most vendors, small differences are likely to wash over time, or simply not amount to a meaningful loss of dollars.

Requiring a review of voucher packages. Let’s call this a job security move for someone with a lot of time on their hands.  Assuming that a match process exists for a PO-based invoice and that an approval process exists for a non-PO-based invoice, looking at the voucher package is a process that adds little to the overall AP process.

Requiring approvals for all non-PO-based invoices. The approval process for ALL non-PO-based invoices is probably the process that causes the most delays and headaches for AP in most organizations. Again, don’t sweat the small stuff and consider establishing a “negative assurance” process for these types of invoices, particularly those small dollar invoices. This recognizes the fact that most invoices, once they arrive in AP, are approved.

Spending too much time tracking approvals on every invoice. Don’t be that “employee” that drives everyone nuts trying to get every single invoice approved regardless of dollar size. As mentioned previously, set a dollar limit for invoices requiring approval. If you want to add additional comfort, test a sample of the invoices which were below the threshold for validity. Email is also a great way to get internal approval. Require that vendors send all invoices directly to AP and then forward only those invoices needing approval to the appropriate employee. Indicate in your e-mail that if you do not hear back from them by a certain date, the invoice will be paid. Then when that date arrives, pay the invoice. Obviously, this only works well for the smaller invoices.

Requiring two signatures on checks. This is not necessarily a bad process, assuming that the signers actually review what they are signing. However, in the real world many organizations routinely require two signatures on far too many checks. Ask the question of what value does this step add. Then consider eliminating it or raising the threshold. Another option is to move to ACH batch payments which doesn’t require a signature but can still require two approvals. Moving to an electronic format for approval saves time for the person approving also. They can sort and select invoices as they choose and quickly approve large volumes of transactions.

Over Reporting.  Who doesn’t love a pretty report with lots of numbers? Maybe a few graphs to really seal the deal. The problem is we start running reports for everything and even worse we feel compelled to distribute all these reports. Believe me, while you may be impressed with your work not everyone else will be. What people really want is information that is relevant to them and is presented in a concise manner. If too many reports are circulating, they are probably not being reviewed in a timely manner or if they don’t provide much value to the end user. Review what reports are run and who is getting them.  Query the end user and ask them if they are using the reports and what they find most valuable. Also consider the timing of reports. Would a monthly report be better than weekly reports?

The moral of this blog is think before you do and don’t just do something because it has always been done that way. Challenge the system! Be a rebel!