THE DIRTY LITTLE SECRETS OF ACCOUNTS PAYABLE

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1 THE DIRTY LITTLE SECRETS OF ACCOUNTS PAYABLE Nicole Caley, MBA, APM Director of Accounts Payable - AAR Corporation Founder & President Payables Solution Partners

2 About me.. 20 years in AP and Operational Accounting (Senior Manager of both AP & AR) Industries include: Publishing Manufacturing US Government Medical Services Retail Services Wholesale Distribution Hospital Healthcare Aviation Teach AP Certification & Leadership Consult at companies across the country to improve AP & AR

3 Why am I here? There is great value in understanding how the other side of operational accounting works, and learning where you can leverage this knowledge to improve your receivable balance. I believe in the advancement of our field, operational accounting, and feel its my responsibility to be part of the solution to being better at what we do. I ve got almost 20 years in this field, most recently with Ace Hardware. To answer any questions you may have on the way AP is handled, and the changing world of AP, it s changing everyday! Most importantly, I just like you guys and gals!

4 POLL THE AUDIENCE What are the top reasons that you do not get paid on time from your vendors?

5 What I found Having financially difficulty or hardship More critical vendors take priority A legitimate dispute with order/service Disorganized or understaffed AP team Because they know they can get away with it Invoices are sent to the wrong location * From 6 different sources, and my own experience

6 What I am not here to tell you Review a potential new vendor s credit worthiness and perform reference checks (although we will only ever provide our best!) Handle disputes in a timely fashion to resolve payment disputes Impose a late fee for past due invoices Over use credit hold to get your invoices paid

7 WHAT I AM GOING TO TELL YOU IS

8 Your Internal Sales Representative In most cases they are the face of your organization to the vendor (me), and they are receiving information that you need They are also negotiating, typically not to your advantage, but to the advantage of earning the business, and lining their pockets! Now, that is not to say that they do not have parameters, but often times we find that when they have no more wiggle room on price, they will start offering higher cash discounts, extended terms, etc. We also find that Sales Reps are typically the ones signing off on the vendor packet or invoice agreements They are also the ones that have seen the office, can get a glimpse of how big the AP team is, the environment, etc.

9 The Vendor Packet This is AP s most significant weapon against you when defending against deductions, late payments, etc. Most organizations do not read them in their entirety (who would) but they are the AP associates responsibility to know inside-out All payment terms, dispute terms, fee notices, and what we won t pay is included in the packet Worst part for AR you usually never see it, as is it typically signed by sales

10 Your Own Policies & Procedures Are they too liberal? Are they consistent across the board? Vendors talk, the world is getting smaller and smaller, and it will be held against you Do you have a comprehensive credit worthiness validation process, and is it revisited often? Are you reviewing customer aging on a regular basis?

11 Building Valuable Relationships We will typically always do more for those we feel we have a personal connection with and are not just a number I know is the way business is done now, but when you can - pick up the phone, establish a rapport A poor credit/ap relationship will always stifle the ease of doing business

12 The Invoice Does it include everything the vendor requires, in the right fields (EDI)? If sending EDI, are you monitoring rejection reports? Are you sending it to the correct location, in the correct manner and format? Does the invoice include the appropriate contact information if there is a question or issue?

13 Let s Circle Back on the Top Reasons You aren t Getting Paid On Time Having financially difficulty or hardship More critical vendors take priority A legitimate dispute with order/service Disorganized or understaffed AP team Because they know they can get away with it The invoice was sent to the wrong location

14 Now what can you do about it The vendor problem Financial Hardship Not important enough Legitimate Dispute Disorganized or understaffed AP team They can Invoice sent to the incorrect place What can AR do? Offer payment plans or reevaluate credit standing, change to pre-pay This is where relationships between AP & AR are critical Learn each vendor s dispute process to expedite. If there is a consistent issue, dig into root cause Make sure your invoice adds no further complications become one of the easy vendors Take away the perception they can, or really make sure they can t!

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16 QUESTIONS? Contact Information: Nicole Caley or LinkedIn: