During my recent engagement with a leading management consultancy firm, I discovered an issue that is quite common among complex organizations: over-customization in financial data management, data tagging and financial report creation. This over-customization often manifests itself in financial reporting views that ultimately fail to correspond to GL data hierarchies.

The issue is exacerbated by the use of Professional Service Automation (PSA) systems (such as those used to create project codes) to handle management reporting when there is no direct tie back to the general ledger. The mingling of different systems and relying on them in ways in which they were not intended has downstream consequences.

Let’s explore the importance of doing honest assessments of the soundness of the general ledger structure, associated dimensions and project management systems in service of financial reporting and decision-making for organizations of all sizes.

How PSA Software Impacts Financial Data Management

Professional services automation (PSA) is software used to help professional services companies (or more broadly, service delivery companies) with project and resource management, typically for projects that involve billable hours and where utilization rate is an important metric.

PSA is valuable in the following areas:

• Project management
• Billing
• Invoice processing
• Time reporting
• Payroll

When optimally deployed, PSA can boost profitability and identify areas of revenue leakage and margin degradation by improving overall operational visibility. Another way to think about it is that PSA serves as the bridge, or link, between the customer relationship management and finance management functions of an organization.

What are Data Dimensions Used for in Financial Reporting?

To explain why over-customization can be such a problem, we should go back to the general ledger, a finance organization’s official record of every business transaction, including accounts payable and receivable, assets, liabilities and income statement accounts. Advancements in technology have precipitated the shift away from static ledger keeping to dynamic models that can automate accounting processes and customize data structures.

A key ledger feature is the use of dimensions that classify GL accounts in different ways. Dimensions are numbered, with:

• Dimension 1 being a legal entity or subsidiary,
• Dimension 2 being the geographic location and
• Dimension 3 being a department or operating unit such as a customer segment or industry vertical.

Additional dimensions can be added later for further filtering and sourcing. This structure gives an organization flexibility as the business grows to either add new GL accounts to capture new transaction types or expand the existing dimension list for new products and services.

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Inherent Limitations of Dimensions in Financial Data Management

Some organizations will treat Dimension 3 (i.e., “Department”) as the complete view, with business leaders budgeting solely on this dimension level instead of the GL account level. This creates problems downstream with inaccurate reporting of actuals versus budget and insufficient variance explanations. As actuals hit GL-level accounts, it can become challenging to tie them to the appropriate dimensions that exist in the PSA system but do not exist in the GL itself.

How can you identify the account responsible for a variance if you never budgeted or forecasted at that level and instead used the non-finance PSA system? It is either impossible or requires extensive and time-consuming investigative digging by individuals in both the finance and accounting departments.

I have seen cases where budget owners live entirely in the PSA world and do not even have access to select individual GL accounts during budgeting and forecasting exercises. These budget owners budget with PSA tools (which by their nature are not finance tools) by selecting revenue and expense types instead of actual GLA codes. The project codes they budget against then become the key translator between the PSA and financial reporting systems. Data elements are missing, however, as not all data populated in the financial system is present in the PSA system, and vice versa.

Collection of Data Elements: Is There a Clear Business Reason?

Certain data elements may be available in the system for tagging, but there should be a good business reason for their inclusion. One example would be the tagging of sales data to geographic regions. Most companies that utilize geographic tags have a strong regional component to the business, with regional budgets, goals and leaders who oversee specific territories.

Regional activity matters in those cases as geography has financial reporting value. But if the company is not organized in such a manner, and is instead centralized in nature, using a regional dimension may not be warranted and may only serve to complicate data organization. Companies should consider phasing out unused dimensions with the understanding that they can always be brought back later should they become valuable.

Financial Data Management: Time for a Routine Checkup

Fixing suboptimal data structures out of which all financial reporting flows requires an organization to interview the constituents who touch the process at any point (e.g., financial analysts, accountants, controller, budget owners) and leverage those learnings to map out the structure, systems and downstream flow of business information.

A finance organization that follows best practices for data management at one point in time cannot automatically expect to remain so indefinitely without checkups. An organization should conduct a complete audit of its finance and accounting data flow every few years to:

1. Document beginning and ending points
2. Identify pain points
3. Identify lapses in best practices
4. Make recommendations for improvement
5. Implement those recommendations

As the business inevitably evolves and end-focus changes, the way sales data are captured, structured, allocated and reported will need to keep up. Naturally, they fall behind. When this happens, an organization’s mantra all too often becomes “this is just how we’ve always done things.” I’ve seen it time and again.

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The recommendations for improvement should be compared to best practices for the company’s particular industry to identify shortcomings. Some shortcomings, or gaps, in data management might be acceptable if justified for legitimate business reasons. Others are problematic or will soon become problematic if not quickly addressed, compounding over time until eventually few people in the organization understand the complete end-to-end data flow that touches all areas of finance, including budgeting, forecasting, and reporting. An outside finance consultant experienced in best practices for data management and financial reporting can prove invaluable in this effort.

For readers who suspect their accounting departments might have areas of improvement but aren’t sure how best-in-class departments operate, we also offer this helpful health-check guide:

Preparing an effective Board of Directors’ report takes a lot of hard work, not just for you, but for the members of your team and other stakeholders who must gather information for the presentation. It’s critical the information is accurate, highlights the important aspects of the organization in an engaging way and presents all the information the Board needs to provide good governance. Here are some tips for preparing a high-quality Board of Directors’ report:

Build a Strong Reporting Process

Board reporting is a collaborative process, which requires tight coordination across all functions within the Organization: Operations, HR, Legal and, of course, Accounting and Finance. Stakeholders on the production side of the process should organize around what materials each team will be integrating into the presentation and identify dependencies and handoffs. Set clear deadlines and schedule check-ins to assure timely delivery.

In large organizations, the Office of the CEO or General Counsel will lead the information-gathering process for board reporting, but it is not uncommon for the Accounting and Finance function, led by the CFO, to be tasked with pulling the materials together. The CFO’s team will then need to build and maintain strong relationships across key functions of the organization to assist in creating the final Board of Directors’ report. This often begins once the Board meeting date is set, and the team works backwards to create deadlines (e.g., closing the books, reporting results, providing analysis and commentary) and identify dependencies. Once those inputs and sources are identified, tools (e.g., Excel) can be used to track incoming data and exhibits that are included in the final product.

Create a Board Meeting Template

Invest some time developing a standard template to use for Board reports. This will save you time when preparing future reports, and it also helps the Board become familiar with how important information is are structured in the board report. 

An example Board of Directors’ Report Template might include sections for:

• Strategic Performance
• Financial Performance
• Risk Strategy
• Sales Activities
• People Management
• Committee Report (e.g., Audit, Compensation, etc.)

Each of these sections should include standardized information and/or key performance indicators relevant to that function and important for communicating the current state of the business and recent trends. This information can be customized by industry.

Know Your Audience

Knowing the Board, their expertise and areas of focus will help you prepare a clear and concise report, saving you from writing over their heads or explaining things they already know. For example, if the Board doesn’t know industry-specific metrics, you may need to devote more time to an explanation in the report, so they can make informed decisions. You should also use language all Board Members can understand.

Help the Board Understand the Report

The Board of Directors’ report is a team effort between department heads and committees. Lean on these stakeholders to help provide content for your report in easy-to-understand language and terms. Your introduction should be a clear and concise summary of what the Board should expect to glean from the report. In early-stage companies, it can be helpful to include Defined Terms in an exhibit or include additional context for the information in each section.

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Provide Solid Financials

The Board of Directors’ report almost always contains financial information and current conditions of the industry. Make sure summary financial data, variance analysis and Key Performance Indicators (KPIs) are included, and put in proper context of overall market conditions, life cycle of the business and the industry. For example, in a SaaS business, Monthly Recurring Revenue (MRR), Customer Acquisition Costs (CAC) and Customer Lifetime Value (CLV) are common KPIs, while a service organization may focus on Resource Utilization Rates, Annual Recurring Revenue (ARR) and Annual Revenue per Team Member. Whatever KPIs are chosen, they should:

• Be a measurable value (and a target to compare against)
• Have a standardized timeline and reporting frequency
• Have a consistent data source within the organization
• Signal operational responsibility within the organization

Additional detailed financial data may also be included as exhibits in the appendix if Board Members want to drill down even further.

Communicate Both Positives and Negatives

Effective Board reporting requires transparency, so present facts in context, even when it’s bad news. There are always two sides to any decision. Providing both the positives and negatives of a situation will help the Board make a complete and informed decision.

Add Visuals

Breaking up the text with visuals is the best way to highlight key information. It also keeps the Board of Directors’ report engaging and more likely to be read. You can break up the text using pictures, tables, pie charts, graphs and even bullet points.

Use Automation to Help Manage Workflow

Leveraging technology wherever practical can be an essential to an efficient reporting process. Using Board Management software allows you to create the Board of Directors’ report and, if necessary, make any changes to the report prior to the meeting without having to print out additional hard copies or addendums. Using Board Management software also allows the Board to ask questions and interact with each other by making notes online. OnBoard, Diligent and Zeck are examples of Board Management software, and Workiva can also be used to collect and manage Board Reporting materials.

Give the Board Time

As noted previously, Board Members typically juggle many responsibilities. Giving them a day or two to read, digest and form questions about the report is usually not enough time. Board meeting experts suggest providing a digital report at least a week in advance of the meeting.

Don’ts – Avoid These At All Costs

There are two items you should avoid for your Board of Directors’ report to be impactful:

• Don’t make it hard to read. Make sure the information is broken up with a good balance of visuals and bullet points to highlight key points, while making sure the presentation doesn’t become “too busy.”
• Don’t forget to budget time for internal review by executive and legal teams. These final reviews can help ensure that the document presents a complete, accurate and cohesive narrative for the Board.

Get Support for Your Board of Directors’ Report

If you’d like support with building or optimizing your approach to a Board of Directors’ report, we can help. Our team of 100+ finance and accounting Consultants are at the ready to support your team and operational objectives. We invite you to contact us to start a conversation.

To learn about ways to improve your financial reporting and accounting function, download our free ebook! It offers insight into how teams can approach improving internal processes for greater efficiency and effectiveness:

While insurance brokerage accounting isn’t necessarily more complex, it is unique when it comes to integrating operations and financial reporting. Whether your agency is in the early stages of getting off the ground or you are an established one looking to grow, below are several topics that should be taken into consideration when evaluating if your insurance agency accounting and financial operations are in sync with your overall business strategy and growth plan.

The Relationship Between Systems & Brokerage Size

Deciding on what system(s) to use or implement is an important first step in building out the financial reporting function for any insurance brokerage (agency). For most (smaller) brokerages, a point of sale agency management system (AMS) is usually sufficient. These software packages are specifically designed to track customers, policies, carriers, premiums, invoicing and producer commissions. Most of these systems also have a general ledger overlay, so they can handle banking, vendor payments and other non-insurance accounting functions. However, these systems are primarily an insurance point of sale system, and therefore the general ledger module is still secondary and quite basic. As such, they lack the elegance and functionality of a standalone commercial enterprise resource platform (ERP).

A larger, more complex brokerage should consider purchasing a standalone commercial ERP (general ledger) system to use alongside their AMS system. This arrangement, although more expensive, offers several benefits. First, it keeps the insurance and operations side of the business separate from the financial reporting side of the business. From a security perspective, this is inherently a better arrangement and keeps non-finance personnel at an arm’s length from potentially sensitive financial data. Second, since the ERP is a dedicated piece of accounting software, it is better suited to handle non-insurance transactions such as prepaid expenses, payroll, fixed assets, payables, accruals, debt, equity and banking/treasury functions. It is also more customizable with respect to the chart of accounts, cost centers, location tracking, and ad hoc reporting. With a two-system arrangement, all non-insurance transactions are entered into the ERP system throughout the month. At the end of each month, the monthly insurance-related and sales transaction data from the AMS are imported into the ERP system.

Revenue/Policy Tracking

Revenue is a critical number for any business, and the insurance industry is no exception. Some AMS systems track revenue natively, but for more sophisticated agencies, dedicated software and or manual tracking may be needed. At a minimum, the agency should keep track of each policy, by customer and producer, along with the renewal date(s), premium and commissions. This is a useful tool for management, as any expected renewals can be cross-referenced with the sales data to ensure all revenue is accounted for.

The brokerage’s book of business is also a valuable tool to assist with yearly budgeting and forecasting and can dually serve as template for each producer’s commission tracking. The accounting departments at the insurance carriers are prone to many of the same errors as any other business. Mistakes in reporting, although not common, do happen. By having a good revenue tracking system, this will ensure that all commissions earned by the brokerage are accounted for.

An additional revenue stream for some insurance brokerages are contingent commissions and/or guaranteed supplemental commissions (GSC). These are typically volume-driven incentive agreements between carriers and agencies and pay the brokerage additional commissions (overrides) for premiums written with that carrier. A solid understanding of the individual agreements and how commissions are generated is a key piece of the brokerage’s revenue forecast. Each agreement should be kept on file and there should be a sufficient tracking mechanism to properly account for any expected contingent and or GSC. Contingent and guaranteed supplemental commissions should be accrued on a monthly or quarterly basis.

Agency Billing vs. Direct Billing

There are two types of billing for an insurance brokerage – agency and direct bill. A brokerage should decide carefully which billing arrangement works best for their business. Many agencies utilize both methods although one method is usually more dominant than the other.

With agency bill, all invoicing and payments and handled by the brokerage. Customers pay for their insurance premiums via an agency-generated invoice. Once paid, the agency remits payment to the insurance carrier. Since the agency’s commission is included in the paid premiums, one of the main advantages to agency-billed policies are that commissions are received up front. Agency-billed policies are common in commercial placements due to the need for several different lines of coverage (e.g., property, liability, E&O/D&O, hazard, cyber). Because different lines of coverage can often be with several different carriers, from a client service perspective, agency billing may be easier as all policies can be consolidated onto one invoice. Agency-billed policies are also easier to track and manage since the agency is in control of the entire revenue cycle. This provides more opportunity for customized billing and gives the client one point of contact for all their insurance needs. Agency billing is not without its disadvantages, however. It requires more resources due to the need for additional personnel to handle the billing, collections and servicing of the policies. It is also more prone to errors as the agency generates the invoices rather than the insurance carrier.

Direct-billed policies, as their name implies, relegate the entire invoicing and collections process with the insurance carrier. The carrier invoices the customer directly and the customer in turn, pays the carrier directly for the premiums due. Once the carrier has collected payment, it sends the agency’s commission to the brokerage. Direct-billed policies are more common for personal lines coverage and worker’s compensation. The advantages to direct-billed policies are obvious – they require far less resources for the brokerage since the carrier is handling the entire billing process. The biggest disadvantage of direct-bill policies is that the brokerage does not receive their commissions upfront and must wait for the carrier to send payment. Also, depending on how many policies are involved for a particular customer, the customer may receive multiple invoices from different carriers rather than a single consolidated invoice.

Regardless of the bill method, both agency bill and direct bill require compliance with the revenue recognition (ASC 606) standard. While an in-depth discussion of how ASC 606 applies to insurance brokerages is beyond the scope of this document, accounting personnel should be familiar with the standard and accrue any earned revenue accordingly.

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Utilization of Trust Accounts

Due to their pass-through nature, all agency-billed policy premiums are paid “in trust” to the brokerage that facilitates placement of coverage. All premiums received and paid are done via a premium trust account. Since a portion of all premiums paid to the trust account represent the agency’s commission (revenue), at periodic intervals, these commissions should be transferred to the brokerage’s operating account.

It is important that funds between the operating account and trust account are not comingled. Premiums should be remitted to the carriers from the brokerage’s trust account and operating expenses should be paid from the brokerage’s operating account. All direct-bill commissions paid to the brokerage should be deposited into its operating account.

The accounting team should have a good understanding how to correctly calculate the required balance in the premium trust account and make the corresponding operating cash transfer at least monthly. Many brokerages make the mistake of transferring money to the operating account based on cash or expense needs and not necessarily what is earned. A worse scenario occurs when the brokerage transfers more funds than is allowable to its operating account, leaving a cash shortfall and putting the brokerage “out of trust.” Without a solid understanding of the trust vs. operating accounts, this could mean improper reporting of cash balances in both accounts. This can affect the brokerage’s ability to manage cash and expenses.

Producer and Agency Commissions

“Producer” is the industry term for an insurance salesperson. They are responsible for prospecting for clients and bringing them to the table to place coverage for clients. In accordance with ASC 606, producer commissions should be booked when coverage is bound. While there are many ways to structure producer compensation agreements, it is a best practice to accrue commissions as they are earned, but payment to producers should only occur once the client pays their policy premiums via direct or agency billing.

If a third-party agency is utilized to place coverage, these agency commissions should also be booked along with producer commissions and paid as cash is collected.

Captive Insurers

A captive insurance company is a wholly owned insurance company formed to insure the company that it is owned by. It is, in effect, a form of corporate self-insurance. Some key takeaways:

• A captive insurance company is a wholly owned subsidiary insurer that provides risk mitigation services for its parent company or related entities.
• The potential benefits of having a captive insurance company include lower insurance costs, tax advantages, underwriting profits and greater control over coverage.
• Captive insurance companies can be helpful when the commercial insurance market is unable or unwilling to provide coverage for certain risks.
• Drawbacks include overhead expenses, compliance issues and the potential to be underinsured.
• Most Fortune 500 companies today have captive insurance companies.

A captive insurance company should not be confused with a captive insurance agent, who is an insurance agent who only works for one insurance company and who is restricted from selling competitors’ products.

Pulling It All Together: Business Partnership

The finance team members should function and view themselves as business partners across all departments. The ability to work with producers, brokers and client service team members helps operations understand the financial reporting requirements and needs of the business. It is equally important for the finance team to also understand the operations side of the business. Also, both parties need to have a mutual understanding of their own opportunities and challenges. By partnering together, the departments can make life easier for each other, work better together and help to maximize revenue, profit and organizational efficiency.

We invite you to download our guide below to learn more about building cross-departmental momentum toward organizational goals. If you want to explore working with any of our team of 100+ finance and accounting consultants, please contact us to start a discussion!

The Accounts Payable department is often considered something of a forgotten branch of the Accounting department. While it plays a pivotal role in ensuring that the company stays in good graces with its vendors, it is often considered to possess simple processes and not require modernization.

In reality, the Accounts Payable (AP) department is often the first line of attack for fraudsters. The common line of attack unfolds as follows:

1. Somebody, pretending to be from the established vendor, calls right before the weekly payment run and claims the bank account was recently changed. Could the AP Clerk update the vendor’s information with the latest bank account number?
2. The fraudster sounds urgent and convincing, and the vendor is an established vendor known to the AP Clerk, so the AP Clerk updates the account number and makes the payment.
3. A few weeks later, when the actual vendor checks in to see when their invoice will be paid, the fraud is discovered.

In addition, by its nature, the AP department interacts with pretty much all other company’s departments. Finding new vendors, approving vendor invoices and tracking actual vendor spend versus budget are done by almost all of the company’s departments. Inefficiencies and broken processes in the AP department are a drag on those departments and are expressed in long times to approve invoices, dissatisfaction with communication and late or non-existent reporting.

For the Accounting department, the inefficiencies in the AP department are especially galling since AP is where the period-close process starts. If the AP department’s processes are inefficient, it might add one to three days to the overall period close.

For the Finance department, whose task it is to provide management reporting, the AP department’s inefficiencies can be felt in the absence of easily accessible data and reports, such as, among others, vendor spend by various categories and the time to approve vendor invoices. The inefficiencies can also manifest in the inability to pay vendor invoices when they are due instead of when they are approved. These issues can necessitate many work hours pulling data together to provide adequate reporting to management.

5 Signs You Could Improve Accounts Payable Efficiency

Do you ever wonder about the efficiency of your AP department? Here are five signs that your AP department is not performing up to its full potential:

1. You keep on hearing how invoices take too long to process.
2. You pay invoices when they are approved instead of when they are due.
3. You do not have a clear picture of how vendors are vetted and on-boarded.
4. It takes a significant amount of time to produce reports, and no automatic reports are delivered weekly / monthly.
5. Month-end close takes longer than it should.

Underlying Causes & Solutions of Accounts Payable Inefficiency

Now that you know some signs that the department could be improved, several reasons might contribute to why your AP department is not performing to its full potential.

The company does not have set approval policies and procedures.

Are the approval workflows all done within a system? Or are there some invoices that come directly to approvers, who physically write their approval on the invoices and forward them to the AP department?

Can an approver easily see their invoice approval queue without spending too much time clicking on different links or logging into another system?

Best-in-class invoice approval and payment processes are housed within the AP system and incorporate the following steps:

• All vendor invoices come into the central AP inbox, for example, AP_Invoice_Submission[at]company.com.
• Optical character recognition (OCR) reads the invoice into the AP system. If the vendor is established, the invoice triggers a pre-population of the template (containing Department, GL account number, Approver). If this is a new invoice, the AP clerk prepopulates the template.
• The system automatically checks the invoice for being a duplicate and flags it according to the preset rules.
• The invoice is automatically routed for approval to the specified approver in the system.
• If the approver approves the invoice, the invoice is either routed to the next-level approver based on authorization matrix, or the invoice goes back to the AP department to be queued for payment.
• If the approver declines to approve the invoice, this triggers a set of workflows based on the specific reason for the decline (e.g., not the correct approver, not the correct amount).
• The AP department then prepares its weekly / bi-weekly / monthly payment run, selecting only those approved invoices that are due.
• The payment run file is approved within the AP system according to the preset approval workflow.
• The payment run file is automatically sent to the bank after the approval workflow is complete.

Additionally, with such a system:

• Reporting on times that it takes various approvers to approve their invoices is easily accessible.
• Reporting on vendor spend by vendor, vendor class, vendor category or any other slicing of data is easily accessible.
• The invoice payment pipeline is known, which helps with cash forecasting.

The AP system is not connected to the bank, so the payment process is cumbersome.

Modern AP systems exchange payment files and BAI2 files with banks to automate the payment process and confirm that the invoices sent to the banks to be paid were paid. However, many companies still manually extract the payment files from their AP system and manually upload these files into bank portals. This process creates several inefficiencies:

1. The manual approval and upload take extra time that could be spent more productively elsewhere.
2. The manual process requires that the uploaded payment file be compared to what was approved in the AP system and approved for payment. Since it is usually a higher-level manager (e.g., Controller) that is tasked with this approval, it is an expensive waste of time and resources.
3. Paid invoices need to be manually marked as paid during the cash reconciliation process. Depending on how many bank accounts a company has and how many invoices it pays a month, this can be a lengthy and complex process requiring a significant amount of time.

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The AP system does not utilize optical character recognition (OCR), and all invoices are entered manually.

As partly described above, OCR significantly reduces the amount of time spent entering vendor invoices. With most invoices, OCR will recognize the invoice sent to the inbox, enter it in the system and send it through the approval workflow. The AP Clerk will code the first invoice from new vendors according to the vendor onboarding documentation, and each subsequent vendor invoice is automatically coded and forwarded to the appropriate approver.

This is in stark contrast to non-OCR entry of invoices, where each invoice needs to be manually entered into the system and manually sent for approval. Depending on the number of vendor invoices the company receives each month, this manual process might necessitate one or several AP Clerk positions.

The General Ledger is not configured optimally for business reporting.

In a recent project, a Client company decided it needed to report P&L by product since it had several product lines that were servicing different segments of the market and thus were priced with significant differences. The company wanted to know if the profit margins on these products were as expected.

It would be optimal to create these new products as members of the Product hierarchy in the ERP. Unfortunately, the ERP was so old that it didn’t allow for Product hierarchy.

The next best case would be to create these products as members of the Department hierarchy in the ERP. However, the company instead created these products as separate GL accounts. As such, the company was not able to clearly track revenue and expenses (which were themselves tracked in GL accounts) by the Product. This meant that the company’s goal of reporting Product P&Ls was not achieved. It is worth noting, that Finance created some spreadsheets that attempted to gather revenue and expense data manually, but it was well known that these spreadsheets weren’t fully inclusive and thus the accuracy of those reports was always under suspicion. Not to mention, the amount of time the reports took to compile was excessive.

Your business has changed, and the AP department isn’t keeping up with the new business needs.

If the company is growing, it is expected that the number of vendors will increase. This sometimes places an overwhelming burden on the AP department because vendor onboarding isn’t automated and thus takes a significant amount of the AP Clerks’ time. This might delay the payment of invoices and jeopardize the company’s relationship with its vendors.

There might also be a significant increase in the number of vendor invoices to be processed. Again, if the entry of the vendor invoices into the system is manual, the burden on the AP department might be overwhelming. In addition, if the approval process isn’t automated and user friendly, the burden on all employees who deal with vendors and approve invoices will increase, sometimes significantly.

Since AP is the first on the period-close checklist, increased processing times will affect the time to close.

Upgrades to Accounts Payable

There are several avenues to upgrading your AP department’s capabilities. The current AP system might be enhanced by:

1. Connecting to the bank.
2. Formalizing the invoice approval process and making it systematic,
3. Reconfiguring GL to allow for new reporting requirements.

Depending on the ERP that your company uses, the systemic enhancements in AP might not require a significant effort to implement. For example, NetSuite has a Suite Apps ecosystem where various third-party apps have pre-built connectors that are so seamless that a user does not even realize they’re not in NetSuite anymore but using a third-party app.

Improve Accounts Payable Efficiency & More

A company that streamlines its AP processes can achieve considerable benefits that may include:

1. Managing cash flow most efficiently.
2. Controlling risks associated with vendors.
3. Lessening risk of fraud.
4. Lessening audit pain.
5. Easier reporting of ACT vs BUD/FCST, real-time decision making.
6. Enforcement of P&Ps.
7. Staffing optimization.
8. Shorter period-end close.
9. Timely reporting.

Since AP touches all departments of a given company, these benefits make life easier not only for Accounting and Finance but also for Sourcing, Inventory, Sales and others.

If you’d like support in improving your AP department’s processes and procedures, 8020 Consulting can help. Our team of 90+ finance and accounting consultants can drive key internal projects or serve in an interim management capacity to support your organizational goals. Contact us to learn how we can help, or visit our finance and accounting services page for more information.

If you’re interested in gauging the overall efficiency of your accounting department, you can also download our free health check resource: