Accounts Payable News^®

Executive Summary

The report has been produced as a joint product of the Euro Banking Association (EBA) and Innopay. As a discussion forum for payments practitioners, the EBA plays a major role in the financial industry as a developer of payment clearing infrastructures. Innopay is an independent consultancy firm specialised in payments.

Other Departments can generate core business - but if AP fails, Business Fails

How a company manages its Accounts Payable procedures affects two very important areas of an organisation’s business: cash flow and supplier relationships.  These two factors become increasingly important to the future profitability of an organisation in an economic climate such as the present.  A fully functioning cash flow is crucial to the smooth turning of the economic wheel.  Companies which apply best practices, manage accounts payable so that the process both contributes positively to the cash flow, and supports mutually beneficial relationships with suppliers.

Overview

Electronic invoicing (e-invoicing) is the issuing of invoices by email directly to your customer. It is also referred to as Electronic Invoice Presentment and Payment (EIPP).

Electronic commerce has grown rapidly in recent years, and by early 2004, almost 90% of UK businesses had access to the internet and increasing numbers of these businesses are involved in e-commerce* - ordering and paying online. Research published in 2004 by the Credit Management Research Centre revealed that 35% of the 400 businesses surveyed issue electronic invoices to their customers.
* DTI - Information Security: Guide to the Electronic Communications Act 2000

Just How automated is Your Organisation?

Many Accounts Payable (AP) departments consider themselves to be working in an automated environment, and certainly compared to just a few years ago, processes have obviously moved on.  However, in many cases the word “automatic” is misleading.  Matching the P.O to the receipt of goods may be automatic to an extent because the P.O number can be pulled up on screen from the ERP system and each line item checked off against what’s been received.  In AP all the open receipts (ones which are yet to be reconciled) can then be seen automatically by entering the P.O numbers on the screen.  However the automatic process breaks down when it comes to being able to match the invoice to the receipt.  This system usually involves manually reviewing the invoice lines in order to complete the three way match.  So, although the system has advanced over the years, many operations are still quite a long way from being truly automated.