Suggestions on the management of accounts payable

Expert Solution

The following may be adopted by the company for management of accounts payable-

The process with respect to the collection of accounts payable should be simplified. Managing the frequency of check up is extremely important part for simplifying; a reasonable frequency for checking the invoices must be set. Lengthy processes makes it more complex and difficult to manage.
If a complete invoice backup is ready only then in that case the invoices should be approved by the appropriate department heads and then signed by the designated personal.
More software based management of accounts payable should be adopted. As it is easier to analyze and reduce errors like entering the incorrect amounts, totals and time due for payments with the help of technology which might have occurred if recorded manually.
Aging reports, laser printed checks can be used by the company with the help of computer that will help in better management and more security. This shall also help in reducing the staff as a lot of things can be updated automatically in the system.
Cash and cash equivalents must be dealt with proper care. All the functions related to cash that is managing cash and issuing invoices should not be handled by a single person. This can be a high-risk area for company and can give rise to the situation of fraud.
In Accounts Payable, entries should be verified for real and cross checked for “dummy vendor”.
Negotiation terms with the parties should be very clear and if any discount period is allowed by them; that should be carefully kept in mind in order to avail discounts; or not attract unnecessary charges.
No matter what the size of the company is; management of accounts payable is of extreme importance as it can be used as a probable source of committing frauds and embezzlement of cash.

jeff jeffy answered 1 year ago

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