Accounts Payable Articles

Accounts Payable Now & Tomorrow is a monthly publication with the most current advice from the trenches based on our reader surveys, interviews with the best practitioners, and the latest changes in all related specialty areas such as T&E, 1099s, sales and use tax, OFAC, VAT, electronic payment alternatives etc. Here is a sample article.

A 5-Step Plan to Reduce
The Number of Paper Checks Issued

Paper checks are a necessary evil. They are probably the most inefficient way a company can pay its bills, yet they are the way most organizations handle their invoices. What follows is a quick look at five ways any group can reduce the number of paper checks it issues followed by an explanation of three processes that will reduce the number of paper checks but are not recommended as the create more problems than they solve.

Try These

P-cards. Start a p-card program for use on small dollar invoices. If you already have a program, look to see what else can be included in the program, further reducing the number of paper checks.
T & E reimbursements. Where appropriate, have employees pay for something under the T&E umbrella and then submit for reimbursement along with their T&E. Of course, for this to work, proper controls must be in place to ensure the item isn’t paid for twice.
A credit card for AP. If you don’t have a p-card program consider getting one card for accounts payable and using that card to pay any invoice that can be paid using a credit card. This approach is especially successful for those organizations with lots of subscriptions. Just about every publisher takes credit cards. If your organization does have a p-card program, make sure one is issued to someone in accounts payable to pay those miscellaneous invoices that can be paid with a credit card.
For those vendors who send many low-dollar invoices, consider going to a summary billing approach or paying from statements, if you can implement the proper controls to ensure no invoice will get paid, this is a real winner.
Convert as many vendors to ACH as possible. We’ve saved the best for last. When it comes to reducing the number of paper checks being produced, this is the “killer app.”

What Not to Do

Refuse to pay invoices under a certain dollar amount. A few organizations have a minimum dollar amount for checks. While this may seem like a great way to reduce the number of checks written, it can backfire. While you can usually find a way to avoid issuing a check for five dollars, there may be those rare occasions when you can’t. We know of one organization that stopped doing business with a vendor who took this approach.
Rely on a petty cash box. Yes, paper checks are an expensive inefficient way to pay invoices, but a petty cash box is a worse way to handle your obligations. As regular readers of this publication are aware, AP Now strongly advocates for the complete elimination of petty cash boxes.
Hold payments until you accumulate a certain dollar threshold and then issue a check for the total. While this may seem to make sense on one level, you could end up carrying certain balances for a very long time.

As you can see, there are a number of approaches that can be used to reduce the number of paper checks issued. Just make sure you avoid the last three. They’ll create other problems much worse than paper checks. And you don’t want to take one step forward and then two backwards, which is exactly what you’d with these three tactics.

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