The responsibility of Accounts Payable in the solving of exceptions
Accounts Payable is the area in charge of the administrative-accounting process of provider invoices. This process includes the carrying out of the following tasks: document management, configuration, coding and resolution of incidents. It is generally accepted that the tasks of approval and payment, even though part of the processing circuit, are not carried out by AP.
The fact that the tasks of approval and payment are carried out by others, is based in the "separation of powers'' within the organization. These activities normally correspond to rules, in the great majority of cases, formalized, that look to separate the responsibility for the accounting, approval and payment.
In the case of incident resolution we frequently hear the following question "Why is it the responsibility of AP to solve incidents?." There is a quick answer and that is because it is normally the area that receives the invoice, and as they have it....But the correct answer is based on the nature of the incidents:
- Formal exceptions, related to validation of forms in the document: calculations; addresses/fiscal data; duplications...are the responsibility of AP, and they should not be recording in the accounts documents which are incorrect in form.
- Fundamental exceptions, referring to the substantive content of the invoice, or "what is invoiced"by the provider. When it deals with discrepancies in the services given, goods delivered, prices agreed..What problem-solving capacity does AP have, beyond identifying the incident?
If there is a problem with the goods, and it is the warehouse that has received it, should it not be the responsibility of the warehouse, which has the information and knowledge of the goods, to solve any problem that there could be with the merchandise?
If there is a problem with the prices, does it not correspond to the person that negotiated the prices to solve?
In these situations AP normally acts as a mere intermediary, in many case with a high level of manual labour: sending documents (with their corresponding copies) checking what and to who it is delivered (with the corresponding attachments, normally excel) and attending to everyone via different media (providers who call on the phone, internal emails with reminders). This situation did not have an adequate technological solution until the present.
In as much as possible these intermediate steps, in which AP only carries out low-value administrative tasks, should be automated allowing the invoice (better if it is an electronic invoice
) to arrive as quickly as possible to the person who truly has the ability to solve the incident. The process would be much more efficient and also save time and money. The technology already exists which makes possible the procedurization and automation of the assigning of exceptions to the person truly responsible through the use of workflow tools
(processing, approval, exception resolution).
The evolution of AP should be to that of a service provider inside the organistion, which brings value to internal clients allowing the business of the company to grow in the most agile way possible.