Accounting 201: Advanced Accounts Payable Concepts and Tools | Chris Benjamin | Skillshare

Accounting 201: Advanced Accounts Payable Concepts and Tools

Chris Benjamin, Instructor, MBA and CFO

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21 Lessons (52m)
    • 1. Course Introduction

      2:00
    • 2. Instructor Introduction

      2:25
    • 3. Overview and Intro to What to Know

      3:04
    • 4. Approval Process

      3:05
    • 5. Electronic Payments

      2:40
    • 6. Policies and Procedures Manual

      2:49
    • 7. Cash Management

      2:52
    • 8. Accounts Payable Other Facts

      2:24
    • 9. Introduction to Tips and Strategies

      0:49
    • 10. Implementing Policies on Expense Reports

      3:27
    • 11. Implementing Fraud Prevention

      2:02
    • 12. Unclaimed Property Reporting

      2:15
    • 13. Payment Strategy

      1:40
    • 14. Internal Controls

      2:14
    • 15. Dos and Donts

      3:42
    • 16. Case Study 1

      1:22
    • 17. Case Study 2

      1:59
    • 18. Case Study 3

      2:18
    • 19. 10 Point Checklist

      2:57
    • 20. FAQS

      4:23
    • 21. Course Conclusion

      1:34

About This Class

Are You An Accountant, Accounting Manager, Accounts Payable Staff, or CFO?

Are You Studying Accounting?

Do You Want To Streamline Your Accounts Payable Department and Processes?

Do You Want To Implement Efficiencies In Your Overall Accounting Procedures?

If You Answered "Yes" To Any Of The Above, Look No Further.  This Is The Course For You!

*** Updated June 2019 with new content! ***

Enroll today and join the 100,000+ successful students I have taught as a Top Rated instructor!

Three reasons to TAKE THIS COURSE right now:

  1. You get lifetime access to lectures, including all new lectures, assignments, quizzes and downloads

  2. You can ask me questions and see me respond to every single one of them thoroughly! 

  3. You will are being taught by a professional with a proven track record of success!

  4. Bonus Reason: Udemy has a 30 day 100% refund policy - no questions asked and no risk for you if for some reason you don't learn from the course!

Accounts Payable is a busy part of any business, and as your company grows it will only become more important.  There are several best practices that when put in place can help you save time and save money as well.  Run your accounts payable department intelligently, and after this course you will have the tools and knowledge to do so. 

Be an accounts payable pro with this course! 

In this course we go step by step in learning advanced accounts payable techniques.  Starting with best practices, we'll then discuss electronic payments, policies and procedures, cash management, and much more beyond the basics.  We then go onto more detailed topics such as fraud prevention, payment strategy, internal controls, and much more. Also included are 3 case studies, the do's and don'ts of accounts payable, and a summary 10 point checklist.

What We Do In The Course:  

  • Learn best practices for approval

  • Learn about electronic payments and handling

  • Learn Policies and produces documentation

  • Learn Cash Management

  • Learn Fraud Prevention

  • Learn about Internal Controls

  • Learn about Expense Report policy

  • Cover 3 case studies

  • Review a 10 point checklist

  • And Much More!

At any point if you have a question, please feel free to ask through the course forum, I'd be happy to answer any and all questions.  

***JOIN NOW AND LEARN ADVANCED ACCOUNTS PAYABLE CONCEPTS AND TOOLS! ***

About The Instructor

Chris Benjamin, MBA & CFO is a seasoned professional with over 20 years experience in accounting, finance, and Accounts Payable.  Having spent the first 10 years of my career in corporate settings with both large and small companies, I learned a lot about the accounting process, managing accounting departments, financial reporting, external reporting to board of directors and the Securities and Exchange Commission, and working with external auditors.  

The following 10+ years I decided to go into CFO Consulting, working with growing companies and bringing CFO level experience to companies.  I help implement proper best business practices in accounting and finance, consult on implementation of accounting systems, implementing accounting procedures, while also still fulfilling the CFO roll for many of my clients which includes financial reporting, auditing, working with investors, financial analysis and much more.  

Thank you for signing up for this course. I look forward to being your instructor for this course and many more!

Chris Benjamin, Instructor, CFO & MBA

Transcripts

1. Course Introduction: Hello, everybody. And welcome to the course an advanced look into accounts payable save time and money for your business. My name is Chris Benjamin. I'm an M b a. Also CFO. But most importantly, I'll be your instructor for this course in the next video, I'm going to do it more of an introduction to myself in my background. So you have an idea where I come and why I'm qualified. The teacher, this course. But for this video lecture, I wanted to just basically go through. You know, what are we going to be covering in the course, and what can you expect from it? So we're assuming that you were already familiar with accounts payable. You understand what accounts payable is you? Probably either working accounts payable. Or maybe you managed accounts payable department in some form. Um, or maybe you're just you're thinking about getting into accounts payable. I want to learn more about it than just sort of the basics in the mechanics. So this course is more about theory and sort of processes that you should really be following. So we're gonna be touching on a lot of different subjects, and I'm just going to mention a few of them. Here s O think we're gonna go into things Sort of like best practices for approvals, managing electronic payments, create documenting policies and procedures. Why, that's important these days. And, ah, socks and whatnot talk a little bit about cash management. How to more effectively manage your cash flow through the accounts payable department. And then, as well, we'll get into things like expense reports. Policies preventing fraud and internal controls will touch even a little bit on unclaimed property laws. And reporting that that, after all of that, will also go into some sort of do's and dont's when it comes to accounts payable sort of lessons learned over the years for myself. Well, take a look at three case studies just Cos. And where they had sort of awkward situations and how they handle them. Then lastly will sort of go over 10 point checklist sort of the 10 takeaways that you really should do an implement in your company a soon as you possibly can. I'm really excited for you to take this course like I said it. It's got a lot of great information, and I love passing on all this knowledge that I have learned over the years. So that said, Let's wrap this video up, we'll go ahead. We'll do my introduction in the next video and then we'll jump right into the content. 2. Instructor Introduction: All right. So just a little bit more about myself as your instructor again. My name is Chris Benjamin, Um, a CFO. It's is a chief financial officer, and I have an M b A. So, first of all, I have ah, b A in accounting and finance. I got that at the University of the Fraser Valley in Canada, and then I went on to get my master's in business from the University of Washington in Seattle, where I focused on entrepreneurship. I really want to work with sort of early stage growing companies. So over the last 20 years of my career, I worked with large, publicly traded companies as well as early stage ventures on the CFO role. I should just mention back in my sort of corporate days, I didn't manage a lot of accounting department. So I got to first hand, sort of be either be involved in accounts payable directly when it was a smaller company, and I would be handling accounts payable, Um, or when I was managing the accounts payable department are overseeing the accounts payable manager themselves, so definitely have been involved in accounts payable for definitely the last 20 years just give you an idea of the most recent 10 years, actually left the corporate world and went into part time consulting. So working as a CFO on a part time basis, with companies just adding value, helping them coming in and helping them set up best processes and what not? And a lot of times, you know, accounts payable is one of the first things that comes up. The companies need to establish rules on eso. Definitely. There's been a heavy focus on accounts payable over the term of my career. Uh, I've worked with over 100 companies at this point. Different capacities. Sometimes it's the ongoing CFO role. Sometimes it's the one time projects, and it might even be things like Help us clean up our accounts payable. You know, it's a bit of a master. It's it's not reconcile ing with the general ledger. There's lots of different sort of, uh, facets to accounts payable. And then, lastly, just I brought companies from seed staged AIPO. So the point of that is just I've seen it all. Um, you know, I've been with the small companies. I've been with the public companies and I've been through the entire process and seeing the growth process. So, um, I feel it's really important to, you know, implement those best practices early on so that you have a solid foundation and you don't have to worry about your accounts payable department going forward. You can only grow and make it better. So that said, That's it for me. Let's go ahead and get started on the actual course. Actually, I will add one thing I just thought of is about to stop the video. Um, if you have any questions during the course, feel free to send me a message. Definitely want to hear from you. Um, let me know what if even if it's just feedback if you have feedback about the course, But certainly if you have questions as well, sending a message through the website and I'll be happy to answer them for you 3. Overview and Intro to What to Know: All right, so let's go ahead and get started. So this first video, we're just gonna do a little overview, just some big, you know, high level discussion. And then I'll give you an overview of what's coming up in the next five videos after that, and then we'll dive into those topics specifically. So first of all, just when it comes to accounts, payable accounts fails one area that requires continual, continual monitoring. I mean, so much happens. For one, there's a high volume of transactions. The bigger the company where the more that's gonna be happening in their accounts, payable department is not just like one thing is happening. You have invoices coming in, you have checks going out. You have invoices that need approval or maybe came and they didn't have the proper approval . Or maybe checks them that need to be signed by a second person because of the amount. Then you also have things like the reconciliations tying out the aging to the general ledger. So there's just so much that happens in accounts payable. It's just a busy department that you really didn't make sure is staffed correctly. So beyond the best basic best business practices. You can implement further controls and procedures, So it's easy enough to sort of set up a basic accounts payable department, if you will in process, you know, at its core, it's it's the same. You know, invoices come in their entered in the system when they're due, no checks, their cut, their signed and off they go. But there's so much more to it, as as I'm sure you can appreciate if you've worked in accounts payable at all so and because there's so much more to it, there's lots of ways to always refine it and make it better. And that's where we're going to give you some ideas through this course on what you can do there. You can always save money and manage your cash flow all at once. So there's ways to, um, use your accounts payable toe sort of leverage what cash you have, and we'll get into sort of some of those tips and techniques as well. But it's just another way of, you know, people don't think of accounts payable department as a direct impact may be on the business in the balance sheet, but it most certainly is. It's on the next side. So these five topics we're going to go into in more detail in the next five videos. But I just want to give you an idea sort of a road map of where we're going. And then first part of this course eso First, we're going to talk about best practices for approval. Um, you know, certainly. Hopefully you haven't approval process, but I give you sort of those best practices that you should definitely implement. Managing electronic payments and approvals. You know, as times changed, everything used to be sort of paper. Probably. Now you have invoices coming electronically have payments coming electronically and whether that's, you know, through direct deposits in an account, maybe, or wire payments, um, or even thinking ahead to the future Electronic currencies Bitcoin things like that. So to sort of start giving you a heads up on that, we'll talk about policies and procedures manuals. Why, it's important to have one, why it's important to document them and why it's important to keep it updated. Fourth, we'll talk about cash management, which we just discussed a little bit and then, lastly, in the section will talk about sort of the touchy feely cider accounts payable, and I'll leave that at that for now, and we'll get to it and we'll talk more about it. 4. Approval Process: Okay, so let's talk about these best practices for the approval process. So, um, you know, just before we dive into this, certainly, hopefully you have an approval process if you don't. And maybe, you know, if your small company may not, But typically, a typical approval process would be Any invoice that comes in needs to be approved by somebody the person that was in charge of making that expense or you purchase that inventory, whatever it might be. So you know, invoices come in, they need to be approved by department managers, and that needs to be typically should be done before the invoice even reaches your accounts payable person. But assuming invoices come directly to them, they would then sort of shuffle off the envoys to the appropriate person to approve. And then when it comes back, that's when it could be entered in the system. And it really shouldn't be entered in system until it's been properly approved. So why do we do all this? Internal control is the name of the game, so invoices should be approved by managers in each department, as we said, in which shows to be coated with the proper accounting classifications. So, um, you know, the most effective ways I've seen it is that, um you know, the actual physical invoice the paper invoices stamped with a you know, box that has a space for our signature box for the approval and then as well has the general ledger coating. So it should be handwritten on that invoice, so it can also be verified them that it's properly entered in the accounting system. Um, ideally, the department should be classifying it. They should be saying, Here's what this is, You know, this is office supplies or this was marking materials. Whatever the case might be, um, the only issue with that is sometimes, you know, people in departments think of someone in the sales department isn't an accounting pro, you know, they're not going to know coding. Usually you have to kind of give them a cheat sheet with just some, you know, here, the five codes that you should be using, you know, code this to one of these. And if you really, really can't find one that fits, then come ask. Um amounts over a certain limit. So example 2500. Whatever that is, need additional approval So, you know, depending on who again, how big your company is. Who's involved? Um, you might want additional approvals. So say you're a smaller company in 2500 is a lot. Maybe the CFO needs toe. Approve it as well. Before it gets paid, invoices should all be sent to accounts payable who can then log them and distribute them to departments for approval. I've seen some companies where they will document so say 10 invoices come in. They note those 10 invoices, they then hand them out to the appropriate departments. And as they come back in, then they can kind of cross them off the list. So at any point, they know you say they only got eight of them back then they know. OK, why did receive an invoice for something? I just haven't got it approved yet. That sometimes handy because say, you know, there's always gonna be people who lose something. They just forget it gets buried on their desk. Um, so then when your accounts payable, person gets a phone call saying, Hey, we sent an invoice for $200 that has been paid on day. Look around and they can't find it, they can at least look at their log and say, Oh, yes, we did receive it. It hasn't been approved yet. Let me check up on that. So again, that's part of you know, that approval process, the more sort of formal you have it and Maura documentation can do without going too crazy , the better it will be for your company and the smoother things will run. 5. Electronic Payments: So next we have managing electronic payments and approvals. So when implemented correctly, electronic payments gonna create efficiency and reduce costs. So, as I mentioned, I think in the introduction. So electronic payments are things like wire transfers come into your bank A C H, which is automated clearing house. I'm just account transfer. Sometimes, you know, the company might have the same bankers, you and they just do a direct transfer into your account. Um, the issue you can see is now you have money come from several different ways. You know, there's still a lot of people just use traditional checks. So you're receiving checks in the mail? Um, you're receiving than different types of deposits in your bank accounts. Um, you need to be fairly, you know, and you don't always so say, a deposit. Two shows up in your bank account for X amount, and maybe it kind of shows who it's from, but it probably doesn't have too much information as to like what invoices it's for. Um, you know how to apply it, etcetera. So you need strict internal controls around these so various levels of approval. So I mean, there's obviously less paperwork there's no checks to sign. So now I'm thinking of money going out. Um, and that actually would be more than applicable here. Sorry. I was talking more about money coming in, which would be more of an accounts receivable function. So now let's reverse it the way you pay translator pay invoices, you send checks, but you send also account transfers. You do a ch is. You do wire transfers. Well, you definitely see the need for control there. You don't You can't just have one person sort of firing off wire transfers wherever they need to go. Um, there is less paperwork and no checks. The sign. So it makes that much, you know, less visible, if you will. Eso things like records when payments were made, the day the accounts and from And who So there should be definitely that if not documenting your accounting system, which it should be, there should be hard copies as well. So you know you haven't invoice to pay. It should be marked directly on the invoice. You know, we paid on this day. Here's how we paid at the counter. Came out of etcetera. Um And then when it comes to things like a ch wire transfers. Certainly. You know your CFO or your owner, whoever might be consent up a profile on the bank account, um, to give the accounts payable person a certain level of authority. You know, maybe they are allowed to initiate, you know, wires and a CH is but only to pre approved vendors. For example. They're not allowed to go in and set up a new vendor, which would be a very important internal control. The have because you could see how they could go in, set up a vendor who isn't, you know, a legitimate company. It just opens itself up to fraud, and then they could work their way around it and make payments. So definitely need some eternal controls there. But you need some form of purple and definitely, you know, things like locking down who can enter a new vendor in the banking system versus who can actually send out payments and having different sort of levels of authority. When it comes dollar amounts that could be sent 6. Policies and Procedures Manual: So let's talk about a policies and procedures manual. Um, So accounts payable, for the most part, is the same in each company I mentioned before. You know, the process is fairly simple. You know, invoices come in. They're approved their entered in the system when it comes time to pay them. You know, checkers counter electronic payments made it gets approved or signed, and off it goes on the new filing away the invoice with, you know, the appropriate documentation. Each company has its own special rules. Those systems, they use approval processes, etcetera. So that's where it gets a little finicky. You know, some companies might have. You know, most companies would have an electronic sort of accounting system. Others might keep their books and excel. I mean, you never know with small businesses. So, um, you need to know sort of what works best with your system. Have your accounts payable staff, create a binder of work instructions for accounts payable. Um, So these days, especially if you're growing company for a public company, you're gonna need these types of things, regardless, just to comply with Sarbanes Oxley act. Now, all processes have to be documented and test it, Really? You should be revisiting these documentations well annually at a minimum just to make sure you still do what you said you did. So your documentation should have screenshots a walk through and every procedure so literally someone should sit down and be able to follow step by step, whatever your documentation is and do whatever it is, whether it's how to enter an invoice in the system. You know what? How did what's the approval process? You know, how do we cut checks? So all those things and it could be very laborious, and it's not very fun, I believe. I know that, um, in order to sort of document all this stuff. But once you do it once and you kind of get it out of the way and you have that documentation going forward, and then you just have to update it and maintain it, it's things documentation comes in useful if some of that sick or unemployed, quits unexpectedly, so we gets terminated. You know, I've been a company's All these things happen. Um, and you never expect them. So when they blindside you, all of a sudden, you're scrambling to try to figure out How do I do this? And accounts payable is one of those departments you probably don't have a lot of time to figure it out. I mean, you're probably have quite a bit of volume, and you you have invoices coming in. They need to be entered. You have to do check runs, all those types of things. So you definitely accounts payable is one area where you really want to focus and make sure you have a policies and procedures manual. And then right here, I say make a point to revise it off than semi annually. That would be ideal. And I know that falls by the wayside, and often times it completely falls by the wayside, and people just never update them, and, you know, they pull it out five years later. Um, that doesn't do you too much good. I mean, some of it might still apply, but say the process has changed. But someone else is trying to follow the old process. They might just run into a roadblock. So I definitely encourage you to, um, stay on top of this making effort, even if it's just set aside one day. Uh, you know every six months where somebody goes through the Count's pale handbook and make sure things are up to date. 7. Cash Management: All right, so let's talk about cash flow for a second. Um, so we kind of touched on before, But basically, you can leverage your cash flow by delaying payments to vendors with no special terms. So somebody send you an invoice? No terms. You know, that's one that maybe you want to hold on to until they asked to be paid. Likewise, you can take advantage of discounts given the vendors given by vendors where it will save you money. It's not uncommon to see you know an invoice with sort of 2% discount or 5% discount if you pay it early. If you're in a position to do so and you have the available cash flow that certainly encourage you to do that, that's saving you money in the long run. So a big part of this, too, that was timing is important. So quarter ends year ends. Companies want to show as much money in the bank as possible. So you know it looks much more appealing to the reader of a financial statement to see, you know, $1 million in cash and with they owe $250,000 payables, then vice versa. If you made a huge say, you just cleared out your payables. So they so zero payables. But they also only shows 715 cash. Still a lot of money, but, you know, situation A look just looks better. A 1,000,000 in cash looks better in the bank than 750,000. Even though the payables changed. People just don't prioritize that as much. So, um, typically quarter and zero ends. That's when you really want to sort of, um, you know, check the timing of your payables. And the last thing I wanted was a huge payables run. You know, the day before the quarter or year ends. If cash is tight in your company, you know, extra attention has to be given to managing cash flow on the timing of payment. So, you know, it might be where you have to budget and you say, You know what? We can only afford to pay $50,000 worth of payables. This this check run Um, unfortunately, 0 70,000 but you have to just pick and choose, then a little bit who gets paid and who maybe has to wait till the next check run. Ah, it's an unfortunate situation, but that's just, you know, part of business. So, you know, you definitely want to pay sort of those squeaky squeaky wheels, the ones that are really asking for money and causing a disruption. And then as well, if there's vendors, you have to pay because maybe they supply you with something that you really need and they're threatening cut you off. They need to be paid. But certainly there's probably some vendors who just haven't said anything. Well, those are ones that can maybe wait, you know, a week or two when you can pay them later on. One way to sort of be on top of this is that continually forecast ahead What your cash flow looks like, you know, you know, in accounts payable what's due this week, next week, a month from now, Um, you know, other additional invoices. My trick, Lynn. But typically, things there do you know, 30 60 days out so you can forecast ahead and say, Hey, we need you know, $30,000 this week and maybe $40,000 in two weeks. Um, for AARP able than our check runs. So whether that's you managing cash flow or it's you relaying the information to someone like the accounting manager of the controller, the CFO, Um, whatever that is. You know, use your position, your knowledge in the company to help with the cash flow situation through the accounts payable department. 8. Accounts Payable Other Facts: All right. So I label this the touchy feely side accounts payable a little bit in just. But certainly everything else is serving by the rules and, you know, managing cash and all that. So let's talk about some other factors. Um, so vendors who have multiple invoices owed, often paying a few, but not all of them will keep them happy. Cesaire, Just you know, you have a vendor, they have 10 invoices with you. You can't afford to pay them all, you know, pay five of them, pay six of them and say you know what will pay the rest? You know, in a week or two, they'll be happy that you made an effort to pay some of them, and that's better than nothing. Um, you learn who creates more issues for for you And who doesn't know it's that old adage, which is the next line. Squeaky wheel gets the grease since very true accounts payable, they'll think about the vendor that calls you every day, asking when you're gonna pay versus the vendor. That does nothing. Well, if you owe them both and kind of the same amount, you're probably gonna pay the one that's calling you every day. You want to get them off your back? Um, you know, there might be other factors involved as well. But in general, it's those vendors that are constantly on you that, um are going to get paid. So you need to manage that and figure out who those vendors are for you and maybe even stay on top of them. And make sure you don't get to that point. Being proactive goes a long way. Tell your vendors your plans, even if those plans mean paying late. So you know, when that squeaky wheel keeps calling and you're not just avoiding them for no good reason , you actually can't afford to pay them. Right now you're just best off telling them. Hey, you know, cash flow is tight right now. It's going to be two weeks before we can pay that invoice, but I guarantee will pay it. Then that might be enough to just sort of, you know, let them go. OK, you know, I'll make a note in our system, etcetera, and then they leave you alone so and reduces the stress on you and accounts payable. It gives them sort of reinsurance. That the money is eventually coming and people like that, and it just works a lot better. So it's better to be honest and avoid the problem. Last point here. Negotiate payment plans when you realistic. Can't Realistically, can't meet all your obligations. You know, you're just in a tough time right now. It's slow. Season sales are off, whatever the case might be. You know, you owe people money just again being proactive, calling them up and saying, Hey, we can't pay that full invoice. But how can we spread it over four months? Excuse me? You know, what can we do to make sure that you do get paid? Just we we literally can't afford to pay it. All right, now up front. And oftentimes you'll find vendors. They're more than happy to work with you. You know, people are so used to being avoided when they come out asking for money. So if you're proactive and go to them and say, Hey, we can't afford to pay you, but we want to. What can we do about it? They'll probably appreciate that 9. Introduction to Tips and Strategies: Alright, everybody, in this next section, we're gonna go over some tips and strategies, things you can do as well in your accounts payable department. So I just want to introduce you to the next five videos and then we'll go into each of these in more detail. So first we'll talk about implementing policies on expense reports. Expense reports. Another big area where you're looking at heavy like rules when it comes to approvals and when they get paid, implementing fraud prevention accounts, payables, you know, the main area where fraud occurs in companies. So we need to take a look at that unclaimed property laws reporting mayor may not apply to your company, but let's discuss it. So you know what it is. At least I will talk about payment strategies. And then lastly, we're gonna talk about, um, internal controls that you can have not just to prevent fraud, but basically to reduce airs and make sure things continually always run smoothly in your company. 10. Implementing Policies on Expense Reports: so implementing policies, UN expense reports. So it's best to set the tone early. You know, when you're growing company get, you know, you know, eventually gonna have expense reports. So just get everything set up, have templates ready, have policies and procedures ready. And when I'm thinking of policy and procedures, um, you know, you need things like, you know, they have to document every expense, you know, and it's usually some sort of excel template where they fill in line by line with the date and what it waas and you know, the name of the place and how much and the tax etcetera. They also need to provide receipts, and sometimes you send them out like anything over $10 or $20 whatever the case might be. Um, just so that you know, there's back up to everything then as well who approves it, you know? Obviously, expense reports need to be approved by somebody, so you know who is the approval person for each person. So that's all part of setting the tone. Have all that documentation done? Here's what we do in this company. Everybody needs to abide by these rules. Um, so teach people not just what to do but why they have to do it. So I'm a big fan of explaining to people why things are a certain way. So, you know, when you're, um when you're showing you don't just say, here's what you do, you know, you feel this report and get it approved, etcetera. You kind of give them a hit and say what? We need to do this because otherwise, you know, people abuse the policy. Or, you know, if we let one person get away with it not another cousins an issue, Um or also, you know, Hey, it, we're a public company. We have documented policies and we need to follow them and they'll be tested. You know, somebody might come and check some point. Did this expense report have the proper approval and didn't have the proper backup and documentation and receipts? So there's reasons why, beyond just you know, this is how you do it. There's actual reasons why it's done. So you empower your accounts payable staff to make decisions and force the accounts payable law, if you will. Um, you know, you don't want people running over them. You want them to have the right to say your accounts payable person or people to say no. You know what? Unless all the receipts air here and this expense report is signed and approved, we're just not gonna pay it. And we're going to send it back to you, so let them have that ability. You know, obviously, if it escalates, you might have to step in assuming to have a staff of people that you managed. But nonetheless, you know, give you accounts payable staff a little bit of leeway there so they can handle problems in advance and makes your job a little bit easier. Ah, so use best business practices first and then refine over time. So, you know, it's nothing to say, You know, say you have a policy and procedure in place. It's just not working. Well, we'll figure out the kinks. I've seen one company. What they did is they turned to an electronic approval system, so all expense reports were done electronically. The people had to, you know, scan images of the receipts. They had to fill it out online. It was its own system. Everybody had their own log in. Um, they would then submit it to their manager for approval. When the manager approved it, it would go to accounts payable. That's very simple, and it takes out sort of that interaction aspect of it, You know, now the you know, the person's filling out the expense report really doesn't have a way around that. They know that they have to do it online, and when they hit submit, it's going to their manager. They don't have a choice. Um, so, um and certainly then people have the ability to kick things back. Say he did submit in. It didn't have the receipts, It could be rejected, etcetera. So. But things like that that's a way to refine the process that made it more efficient, safe some paper and saved a lot of time as well, and also just made it so People complied with the rules more so definitely worth while to look for ways to refine your system and implement better practices. 11. Implementing Fraud Prevention: so implementing fraud prevention. So multiple best business practices come to mind when it comes to accounts payable. Um, you know, it's the number one department where money is leaving your company. I mean, it is pretty much the only department where money is leaving your company. Most likely, um, it definitely is the number one place for front. There's lots of ways that that should be prevented. So, ah, as technology changes as well and processes and procedures you need to evolve, evolve your eternal control in your fraud prevention. So a simple steps a little. Give one example here. The person signing checks is never the person who mails them. It's very simple, just, you know, otherwise, you could see someone would just sign checks and then mailed them out. Maybe they sign a check to themselves. You don't know, Um, checks over X amount of dollars Need two signatures. You know, maybe it's $1000. Maybe it's 10,000. Just depends on your company. Out big. It is what's a typical Czech look like? There's lots of other ways to things like the person, and I'm assuming maybe there's one person accounts payable. No, they're not allowed to both set up vendors in the system and as well, you know, entering voices. Um, the reason for that is, you know, I've seen situations where, you know, they set up a fake vendor. Basically, they said, Are they set up themselves? Is a vendor Incan entering voices and pay them. The last thing you want is the person who enters vendors, um, and there's checks and invoices and also signs them. I mean, that person pretty much has free reign of the bank account, so you don't need that. You need segregation of duties and proper approval processes in places. Well, that's one area where it can really audit it. And to see you know what is being done, what airways to break things up. And if you are a smaller company and you don't have enough people to sort of break up the duties that much, um, you can certainly do it even just with two people. You know, the, you know, the CEO maybe is the one who enters new vendors. Um, you know, they're certainly not gonna have their hands, you know, involved in AP every day. But the P person can come to them with a list and say, Oh, I need these three new vendors set up You know, here's who they are and here's what they do are Here's a copy of the invoice that we received, and if it's just not working, then you refine it, maybe find a different way to go about the process. 12. Unclaimed Property Reporting: so unclaimed property laws reporting. So this is something that definitely a lot of people don't know about or don't even know that they're supposed to be doing so. Cheques which are uncashed, have to be reported to the state. So this is in the United States. Um, each state has its own laws and reporting it gets complex. If you do business in multiple states now, you have to kind of keep track of what's the the law of the land in each of the States. But it's one of the things you have to do. So you have to go out, find out the reporting procedures and lost for each state. And if it gets overly complex, their software inventors, that will do it for you. So what it essentially is is that, um, you know, you write all these checks and say there's just a few that go in cash. I mean, most people are pretty good about cashing checks, but you know, you have a few checks which you've issued, and there are year old or they're two years old. That's where you have to check what that that deadline is with the state or what the the cut office for timing. Um ah. Those do have to report to the state because basically what they do then is Then they put out reports that say, Oh, you know, um, there's $100 check out there that from X y Z company, Who is you that was cut to ABC company. So if ABC companies ever out there looking and saying, Hey, we need money, um, they might find the report that says that it also comes in in the things like legal proceedings and, you know, bankruptcy. You know, the state can then look and see like, Oh, you know, this company had a check which was cut to them that they never cash, but they technically no have $100. Now we're seeing $100. But what if that check was, you know, $20,000 somehow it got missed? Um, you know, the company was going through bankruptcy and went out of business and just never received The checker didn't cash it, and it got lost. Now there's $20,000 that's in your bank account that never came out because there's this uncashed check, which is kind of unfair. I mean, you owe them the money they just never received. It's not because of anything bad that you did. You did the proper procedure. Just circumstances that checked and get cached. Well, that's why the states get involved. They want to see what assets are, you know, sort of in transit, if you will. In between people, Um, that just never quite made it. Basically got hung up somewhere. Eso that's the purpose of unclean property laws. And you like it says You just have to sort of look into it yourself and see what you need to be reporting. I mean, certainly there are sort of vendors out there that will take care of it for you. Um, if it's much too complex. 13. Payment Strategy: So let's talk about payment strategies. So it's good to have a set payment schedule. So just twice a month and just not allow exceptions. People, you know, we'll just continually run over you and me like a king company check and company check. So if you say no, we cut checks on the 15th and 30th. Unfortunately, that's it. Um, of course, there's always gonna be exceptions to the rule, but only allow them if they're very infrequent and true emergency checks. So maybe no. The company signs a contract with a new vendor who's gonna be implementing software, and it's starting tomorrow, but they need a check. Well, that might be a special reason, but if it's just an average vendor who just, you know, mad and they don't want to wait a week, well, they might have to just wait a week. I mean, you need to sort of have those set rules. Otherwise you'll just continually be writing checks. Like I said, Um, no. Which vendors take priority for paying as well. So again, back to kind of you have, you know, only X amount of money. You have to distribute the best you can figure out which vendors you want toe to pay first before others. Um, I know how much you want to send out on a check, run and select up to that amount, and that's very common. So you might say, Hey, ah, we can afford $50,000. That's check Run and then your accounts payable person can figure out. How do we allocate 50,000? Maybe it covers everything. But if it doesn't say you have 70,000 let's do while you're accounts payable person or who might be yourself is the best person to know who could be paid and who can maybe wait another week or two? Um, or two. It would most likely be if you have set check runs, um, so let them be involved and sort of take control on that. But it's it's good to have an amount and not just necessarily say, Well, we're just gonna pay every check. That's do. Um, that's where you can run into some sort of cash flow management issues 14. Internal Controls: um, let's talk about internal control so again, you know, back to the fraud. So but it's more than that. Um, so set your standard internal control. So this relates to fraud prevention, but goes beyond just that. So what other benefits does internal controls have? Well, for one, it prevents errors, ensures procedures were followed. It prevents invoices from being lost. You know, things like internal controls are things like, you know, in voices need to be logged as they come in, for example, or before there, then sent out to a department for approval. You know, every invoice, maybe get centered in the system right away. Um, and it could be tagged in the system as you know, out for approval. Maybe whatever things like that might be air there, certainly of filing. You know, everything. Like nothing gets filed completely way until it's been paid in the backup. It's attached. So these are all internal controls that you have to make sure that things are very routine , and it's easy to then, um, if you're looking for something, you can figure out where it is in the process. Um, it's you can use best business practices to begin with and expand on those. So again, just sort of start, start with the basics, you know, things that make sense even. Just look up. What accounts? Payable best business practices for internal control. Implement those and then you go. Okay, well, this work stress. And, you know, maybe this other thing doesn't let's figure out a different way of doing that, but that we're still sort of secure and following an internal controls. And then last point here is larger. Companies who comply with Sarbanes Oxley Act must document tests or procedures. So now we talked early on about that procedures manual You're going to need to have one of those, and that very much is your internal controls. That's what documents all the things that you do. Eight is the, um, say in your accounts payable department. Um, another part of serving is actually is identifying weaknesses in your system. So maybe a weakness is Hey, we really don't have, you know, a big accounts payable department. So the person that cuts checks also entered vendors in the system. Well, that's a weakness. And that's one thing you're gonna have to address and figure out how you mitigate that weakness, you know, in that potential for fraud or just for errors even. Say you, um So you do enter the vendors in the system, and that's okay, but nobody's double checking them, and maybe you enter the address wrong. You re entered their tax i d. Number wrong. So it's always good to have multiple steps and multiple people involved when possible. 15. Dos and Donts: Okay, so now just some do's and don't things. You know, we've probably touched on a lot of these, but just to sort of reiterate them and really drive home some of these points. So first of all, train and invest in your staff. The last thing you need is people who aren't quite clear on what their job is. They don't know how to use your accounting system, whatever the case might be. So it's It's definitely worthwhile making sure you have a solid accounts payable staff or, if you are the accounts people. Person who's taken this course really own your job and make sure you understand everything . And if you don't then feel free to ask questions, either, I mean, maybe it myself. But certainly at your employer. Ah, use sophisticated but not overly complicated software solutions. So you know, certainly we want to automate as much as we can. And obviously that's the way things are going and will continue to go. Um, but you don't need to get overly complicated. You know, I've seen companies by these super expensive complex, you know, accounts payable, you know, plug insert their systems and they just didn't need it. I mean, all you really need the end of the day as a way to entering voices Tag, You know, inter vendors tag. You know, the payment terms, you run checks, etcetera. We know what accounts payable is, um, have procedures you used on standby. So, again, things, everything should be documented. All the procedures screenshots are amazing. When you do documentation, it just really helps people a lot better than explaining. You know, click here, click there, um, and then as well you. The other thing is you want to revisit those all the time? Why? I say all the time. I mean, maybe say every six months or at least every year. Um, and make sure that they are up to date. Ah, so do incorporate levels of approval to mitigate chances of fraud. So again, that's in segregation of duties will be the other thing. I would say, you know, things like the person entering new vendors is not the person who cuts checks or the person who signs cheques is not the person who printed the check. Whatever the case might be, be organized and emphasize it within your company. So have, like, sort of a set way of going about accounts payable. There's nothing worse than seeing a messy accounts to pale department invoices everywhere, you know, because people it handles a lot information, you will get a lot of questions thing, you know, like, Oh, did we receive this invoice? Did we pay that invoice? Um, you know, how much was that? How much do we spend on X Y Z? You need to be really organized to handle that sort of volume of information and questions . Now, just for some five don't things things that you should not do, So don't neglect looking for improvements continually. You know you want it. You know it's easy to get stuck in a rod or just busy with our jobs, but they're certainly ways to do things better. And maybe that's one way you encourage, you know, are in power accounts payable or again. If you're the council person, just think about it. What are better ways to do your jobs? What are sort of those bottlenecks and what could you be doing that would make it a lot better for you? Don't forget to maximize your cash savings. So again, that's about that cash management. Um, you know, I quarter ends at year ends may be delaying some payments, and it's also about taking ah, advantage of turn favorable terms. Like where you get a discount that's gonna help you out. Cash wise, don't neglect to manage your cash flow. So, um, making sure again, like so say your budget is $50,000 for accounts payable. Run. You know, making sure you stick the $50,000 you don't go over. That amount actually cut $70,000 worth of checks, and now you're in a cash crunch. Don't allow exceptions to the rules. So if the check rounds or twice a month and they're twice a month and that's what you kind of need to stick to And lastly, don't forget to look at accounts payable from different views at times, you know, look at ratio analysis. Look at your accounts payable. Aging. Um, you know, it's easy to just get stuck in the accounts payable, sort of, you know, busy nous of it all. Ah, but if you look at it from other, like for this sets for a ratio now, so see what you know your cash accounts payable is, or see how your accounts payables trended. Over time, it was just continually growing, look for different things and then ways that you can help refine it and run it a bit better . 16. Case Study 1: All right. So let's look at our first case study. So a public utility company. So they operated in several states. They had multiple counties in each state, approximately 20 satellite offices, each with its own operations, its own bills, Obviously. So accounts payable was all handled at the corporate office to full time employees. That's all that it was accounts payable very regimented procedures, including meeting proper approvals. Region voice software handled calculating wind to pay based on the terms and due dates. And lastly, since the company was sufficiently capitalized, they would use the early payments and get discounts. So this is kind of like an ideal accounts payable situation, if you will, you know, things are handled Well, um, they have an approval process in place. You certainly appreciate that. Probably Sometimes things went a little awry just cause you have 20 satellite offices, all receiving invoices and then having the four of them on to the corporate office. I'm sure there's certainly times where maybe something went missing or somebody thought they submitted invoice to corporate, and they hadn't, um, you know, our corporate, maybe confused. Maybe they coded an invoice to the wrong satellite office. so there's no There's still lots of ways that companies can, you know, make little errors. And it's not, say those air huge things, but certainly there's always room for improvement or ways to look for things to do it more efficiently. But I'd say overall, you know this company that a terrific job of handling their accounts payable. 17. Case Study 2: Ah, So case Study Number two private consulting company. Ah, they had five offices in five different states. So again, a multistate kind of company each office paid as many bills using credit cards as possible is definitely a different approach. Um, and one male back up to the office. This allowed the company, which was smaller to leverage credit card points and benefits from all the purchases. The accuracy and completeness of backup fridge purse just depended heavily on the satellite office submitting it. It did create some issues. So when there's no backup but invoices already paid on the credit cards, So this one's definitely a different, you know, wouldn't talk about credit cards and all that sort of not a traditional way of handling accounts payable if you will. Um, this company, like it says the main reason is that the purchases they tended to make Ah, we're fairly expensive. So they were consulting company, but they would be buying expensive software and then reselling it for much more. Um, and we're talking tens of thousands of dollars so they would buy the software, get all their points and benefits on their credit cards, pay the credit cards off, and then they have all the bonuses from that. Um, of course, the problem being is if the satellite offices didn't, you know, submit the proper, you know, backup. So now you have charges for, you know, cup 10 20 $30,000 on a credit card. Ah, that's do. And there's no backup for it yet. Those air big dollar amounts, so certainly could lend itself to a bit of Harry situation again. This wasn't a big company. Even though they were in five member states. It really was just a few people at each office. So not a large company. And their job is much more focused on the consulting and doing that and making the sales, um, they're not quite as worried so much about, you know, making sure all the the invoices get submitted to the to the main office. So, um, maybe not the best way to handle accounts payable, but can certainly appreciate the fact that we're trying to get those bonus points on their credit cards. Um, and not just I mean, if you found a better policy and way that sort of do this and document it, maybe they just had to submit those invoices electronically. I want to say people a lot of effort. Um, then that this definitely was one way to sort of leverage those credit cards and learned something from them. 18. Case Study 3: okay, it's up. Next for 1/3 case study was a private regional grocery chain, so it also operated in multiple states just to due to the nature of the grocery industries , many invoices were street received by each store daily. So just think about you know, you have the meat department and the dairy and the produce and, um, just the canned goods and all frozen all the different departments and each of those differences no buying stuff daily, that to restock the shelves. You know, they can't only have so much space in the story to hold on to things plus things like even produce. I mean, that really has to be daily. It has to be fresh, so they're just continually buying, um, buying items and then having invoices to send a corporate. So each store had a dedicated accounts payable person, but who resided at the corporate office. Um, and just it doesn't say it here, but so each person, each accounts payable person typically had 2 to 3 stores that they were responsible for. Just pendant on. You know, some stores were bigger than others, so somebody might have two big stores or three small stores. So any invoices without approval by store managers were sent back to the store and just a circle back briefly to the accounts payable person having that dedicated person really help . Because then you can build, like, a report with the store. So, you know, there was frequent sort of conversation. So, you know, the meat manager of the produce manager, You know, calls to find out if the bills pay. There are always calling the same accounts payable person. So they they get used to their person nonetheless. So they, uh, this chain capitalized on discounts by entering the terms of each vendor in the invoice states. So they had it set up in the system like, Hey, if we get a 2% discount of paid before 10 days, then yes, we're gonna pay it before 10 days due to the high volume, the chain was able to negotiate further discounts for early payment so they might get more than they might get 5% instead of, say, 2%. So certainly this was one that was definitely, well run huge volume, But they also had a very large accounts payable department. I mean, imagine. I think they had 20 stores in general, so they had a roughly, um, say eight or nine accounts, payable people, some handling three stores, some handling to stores. It's a fairly large. And then there was accounts payable manager as well, who had managed accounts payable people making sure everything was getting entered. Reports were being done communicating well with the store, sending things back if they needed to, etcetera. 19. 10 Point Checklist: Okay, so let's just go over a 10 point checklist. 10 things you should really consider. Definitely think about doing or implementing our let's run through and see what the main takeaways from the course the number one spend time up front to implement the proper procedures. Just doing a little bit of leg work up front will go a long way. You save yourself a lot of frustration in the long run, negotiate additional discounts for any high frequency vendors to use. Not gonna play to everybody. But if it does, then certainly it's worth asking it. Always worth asking the question. Ah, three. Utilize your accounting Softwares ability to the fullest on taking discounts, so there should all be automated. If that's your policy that you take this counts, it should be set up in the vendors profile. Like what? Those discounts are, um, and then it should be sort of the default. So, you know one vendor always has 2% off if paid within 10 days. That should be set as the default terms for that vendor, so it just happens automatically. Trainer accounts payable staff to be the bad guy. If it's not approved, it doesn't get paid, You know, Don't make them come to you every time an invoice comes in That hasn't been properly signed off on assuming you're the manager. Um, allow your accounts payable staff to have some decision making abilities on what? To pay again. You know, the simple, you know? Hey, we have $50,000 budgeted. You know, you decide what? Where that goes. Um, you know, you know better who they can't spell person those best who you know is the squeaky wheels. What's important? You know, they they're more interfacing with the actual vendors and with, you know, the different departments. So let them have the power to decide that organization is important. Invoices received their enter their payable there paid, you know, whatever. I mean, that's a very generic description of accounts payable. Um, but, you know, have a system in place, not just, you know, invoice come in and they go in a pile and they might get enter that they might not, you know, needs to be very documented. And, you know, when something gets entered, it gets stamped. As with an entry date, etcetera, limit check runs two per month. Should be plenty again. You can make those one time one off ones if you absolutely have to. Ah, but only having, say two a month or even fits one a week. It just saves you a lot of frustration or not constantly doing check runs. It takes a lot of time out of your day. You have to, you know, pull the little things, even pull out the check stock, you know, maybe swap the printer. Um, you know, run the counter pain report. Decide who's getting paid. You go get them signed. You know, it just takes a lot of effort, so mitigate down to stay 2 to 4 times a month will help a lot communicate with vendors again. You know you can't pay someone. Just let them know that it's better than just sort of ignoring people. Ah, process electronically where you can. I mean, you save a little bit of costs in terms of like paper and whatnot, but more so, it's just more efficient. It gets people paid quicker as well. Ah, and the last learned from your mistakes. I mean, we all make mistakes. Mistakes happen in accounts payable. Maybe you pay the round vendor you, uh, you know, you send you pay the wrong invoice. Debut marked the wrong invoices paid when really meant to pay a different one? Whatever it might be. Just learn from the mistake. How did it happen? And what can you do to so that it doesn't happen again? 20. FAQS: all right this quickly. Want to go over sort of 10 fax Basically questions that come up all the time about accounts payable again might be some repetition here. But these are just things that tend to come up. So should the person entering accounts table also cutting signed checks? Ah, short answers. No, if you have the option, they shouldn't be. Obviously, it's about, um, segregation of duties and preventing fraud and internal controls. Now, that said, smaller companies don't always have that luxury. So, um, certainly hopefully you if you can split it up. If not, do your best to maybe find other ways, you know, definitely, like double check that checks going out. And maybe someone else runs a reconciliation. Ah, what are standard payment terms for employees? Expense reports. So usually it's, um, it depends from what I've seen is Net 30 so expense report comes in. You know it's not 30 or it's the second paycheck. So it's not the next paycheck but will be on the one after, because a lot of times that money is just distributed through the payroll system. If it's not in the do, actually physically, just pay them out of accounts payable. Um, that 30 would be would be reasonable, sometimes as tough for employees because, you know, they may be went on a business trip. You know, they put it on their credit card. Credit cards do, and you're not gonna pay them for a month. So you kind of have to figure out what works best. Um, but at the other day, you do want to have a policy in place. You don't want to do it. Case by case. Should X exceptions be made for Must have check requests. Um, I mean, if it's a must have on it support. I mean, that's really your decision or the CFO whoever's in charge, you know, again, I made the example of its You know, you entered into a consulting contract or software contract, and you just that has to be, you know, started tomorrow and they need a check. Then maybe that just has to be cut. But if it's on the flip side, a vendor who's just grumpy, that's probably one that can wait. If department managers approve invoices who approves their invoices, that's always a great question. Um, usually it's just whoever they whoever the person reports to. So, you know, a department head might report to the CEO. Well, that's who approves their invoices or their expense reports. Um, shouldn't voices be paid? Should invoices paid be managed based on dollar amount somewhat? I mean, that's that your judgment call? It depends really is very situational based on your company. So if you you know, I only have x amount of dollars to distribute. Yeah, you might want to pay. Maybe you decided you'd rather pay, you know, 10 small invoices than one big one. Or maybe you'd rather pay the one big one to get it out of the way and hold off on 10 small ones. So, um, you do kind of manage, I guess, in that sense, based on dollar amount, should accounts payable to be managed entirely electronically in terms of yet, like an accounting system? Yes. Absolutely. I mean, the least, the less manual intervention. Ah, the better for sure. When it comes to count Pale just cause then everything is documented and in a system and formalized and typically is more efficient as well. Um, our department is able to see what invoices have been paid online. Typically not. I mean, that depends on your county software. Um, I'm gonna say, though, in my experience, no. So you have a bigger company, different departments or submitting invoices. They typically don't necessarily have insight than in what's paid, because, um, you don't want to give them access to the accounts. Payable system is the punch line. Um, should invoices for one vendor be added up and entered is one I item. Ah, that's no. You should always enter invoices individually. That way, when there's a question like, Did we pay invoice number 123? Well, you're able to go and see that specific invoice, then rather, and try and figure out what it was grouped with and lumped in with. I should void a checks be kept. Certainly this we filed away. They should be locked up just on the sides. All of your check stock in general should be under lock and key Onley, Maybe the count's pale person to see if I have access to it. You don't want, you know, random people to have access to blank checks. Um, and keeping way checks is important. Just cause again. If there's ever any questions, you can go to them and say, you know, Oh, this check was avoided. But if say, that same check number did cash for the bank, then you have something to look into. Ah, what are some typical payment terms given by vendors? So the standards something like Net 30 which is usually written, is like end 30 just makes the invoices doing 30 days. A lot times you might see 2% 10 or to 10 that 30 NBC means if you pay it and within 10 days to get 2% off. Otherwise, it's due within 30 days. So there you go. There's some common questions, hopefully picked up a bit of knowledge there as well. 21. Course Conclusion: All right, everybody. So that's it. Congratulations. We made it all the way to the end. So, uh, let's just a wrap up here. Some high level points and a few extra things, the first of all accounts payable just a dynamic part of the business. You probably know that already it's only gonna get busier assuming your company's growing. And I surely hope it. ISS. So I definitely think about implementing all those best practices and policies and procedures. Managing accounts payable is more than just paying bills on time. Hopefully, you have a sense of that now, if you did not already and then lastly, there there's areas for improvement in process flow and cash flow management, typically in the accounts payable area. So whatever you're doing, there's probably a way to do it better, more efficient auras. Time girls goes on ways to implement other ways of doing things, implementing systems, all those things we talked about, so thanks everyone for taking the course. Just a couple things. If you haven't already had a chance to leave feedback for the course, I'd really appreciate it if you could go ahead. Whatever I can do to get those five star ratings and get your comments. I love hearing from you. If you had any questions during the course or now feel free to reach out to me through the website some of your feedback about the course or ask me your questions. Uh, and then lastly, I encourage you to check out all my other courses as well. I've got a lot, of course, that some of them were directly related to accounts payable, others just related to accounting and finance or entrepreneurship, building things and excel. So lots of stuff out there so definitely encourage you. Toe check out what else I have out there and available for you. I love to be your instructor on additional course or two. Eso Look at those Thanks so much everybody for taking the course, and we'll see you next time.