10 Accounts Payable Best Practices for Paying Invoices

Let’s face it … AP isn’t the most exciting department to work in. But it is definitely one of the most important. To help your organization achieve high performance (and reduce errors) in your AP department, make sure you follow these 10 AP best practices for paying invoices.

• Maintain good communication with your vendors. When requesting a W-9 from new vendors, take time to explain your AP department’s vendor policies and procedures. This will help ensure vendors send invoices to the correct place, what information you require on the invoice and any additional information you need to process the payment.
• Request that your vendors send all invoices directly to AP. Many vendors logically assume that invoices should go to the person who placed the order. However, that often results in the following issues:
  • Delays in processing the payment — because the invoice gets “stuck” in the department that received the invoice.
  • Lost invoices — the person who received the invoice may not know what do to with it.
  • Duplicate invoices — if an invoice is delayed or lost, then the vendor may send a duplicate invoice.

  To prevent these issues, always ask vendors to direct invoices to your AP department.

  • Enter invoices individually — not as a batch. Grouping invoices, such as by vendor, makes it difficult to find specific invoices for problem resolution or auditing.
  • Notify vendors about any adjustments. If the invoice amount isn’t the amount that you’ll be paying, let the vendor know why.
  • Ensure separation of duties. To reduce internal fraud risk, different people in your organization should approve purchases, receive ordered materials, make invoice payments and perform reconciliation.
  • Take advantage of vendor discounts for early payment. Some vendors offer a discount for early payments, such as “2/10, net 30,” which means that you can deduct 2 percent of the invoice amount if you pay the vendor within 10 days instead of 30 days.
  • Include any credit owed to you from the vendor on your next PO. If the vendor owes you a credit, ask them not to include the credit on the invoice unless you included the credit on the PO. If they do, and the PO and invoice amounts don’t match, you’ll then have a reconciliation chore.
  • Check the invoice to see if the vendor accepts card payments. Even if you have to manually process that payment on the vendor’s website, it will add to your card spend and possible rebates.
  • At contract renewal with your vendors, include card as your preferred payment method. The more card payments that you make, you’ll increase your card spend and your ability to earn cash rebates from your financial institution.
  • Always pay from original invoices, not copies. If you have to pay from a copy, be sure to check your records for the same invoice number and dollar amount. Otherwise, you could be making a duplicate payment.

  Plus, don’t miss our handy infographic, which captures all 10 of these best practices for paying invoices.