Establishing an effective and well-documented Accounts Payable process is an important tool in managing the financial resources of your organization. You worked hard to create an operation that supports your mission; have you given your A/P process the same level of scrutiny to mitigate potential risks of mistakes and fraud?
It’s important to bear in mind the costs of an A/P process that is, perhaps, well defined but not completely monitored, can result in not only substantial financial losses but the loss of reputation and trust an organization has built with its clients, backers, financial entities and more. In fact, it was reported by the Association of Certified Financial Examiners (ACFE) in 2016 that the median time of detection for fraud schemes was 18 months. In their view, the majority of organizations won’t be able to recover their financial losses from fraudulent activity.
What is the state of your A/P process? Have you been discovering and fixing frequent mistakes? Have you been proactively planning how to shore up weak aspects? Every action you take to create a solid process supports your efforts, whether preparing for taxes, an audit, or an accounting to your board. It also gives your team a reliable path to accurately measure your financial health.
Any accounts payable process you adopt for your organization should address the following best practices:
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- Establish and maintain a clean vendor master file
- Ensure transparency in disbursement systems and processes
- Implement continuous monitoring of vendors and disbursements for potential fraud
- Conduct regular audits on all transactions to identify and recover duplicate payments, returns, rebates, pricing errors, sales tax errors and more.
In the series, we've highlighted aspects of an effective and protective accounts payable process, exploring how to use these best practices to develop specific procedures for your organization, implement these procedures throughout the organization and how to periodically audit them and update them as business conditions change. Here are links to the rest of the series:
- Mitigate Mistakes & Fraud: Creating an Accounts Payable Process for Effective Vendor Management - Part II
- Mitigate Mistakes & Fraud: Creating an A/P Process for Legitimate & Accurate Disbursements - Part III
- Mitigate Mistakes & Fraud: Creating an Accounts Payable Process to Safeguard Your Business – Part IV
Have you checked in to see how well your process is supporting your organization recently? Anytime, is a great time to begin. Talk to your team. Review your pain points. Be proactive for your future. As always, we’re here to help. Contact us today!