Is Accounts Payable Accounts Blamable?
Accounts payable in an organization is a service center. There is no charge per se for its services (unless you have a chargeback model). But it is still a service, not unlike payroll or IT. If AP doesn’t work, areas of the company fail or are debilitated. Yet, rather than be viewed as a contributor to success, accounts payable often becomes accounts blamable. AP becomes the business’s doormat.
When something goes wrong with a vendor relationship, it’s often a payables issue.
“Did you get my invoice?” “Where’s my payment?”
“Why is my payment late?” “This is the wrong amount.”
“You sent to the wrong address.” “You sent me two checks so I cashed them. What do you mean it was a mistake?”
Accounts payable has to react to being a front-line contact with suppliers who didn’t get paid. And when they don’t, the vendor hounds the buyer. At that point, where do internal customers point the blame? Accounts payable. Its disparagement is practically accepted as “the way it is.”
“We can’t do anything about it. That’s just the way AP works. It’s supposed to be slow and inefficient.”
Likewise, vendor expectations are also low in regards to AP. And as a result, they may levee late fees, try to shorten payment terms, or generally have people in their billing department hound your business until they get paid. That’s not so bad, after all, that’s why you have an accounts payable department: to take the heat from unhappy suppliers.
That is until it’s time to negotiate with that vendor again, or when a product or service are desperately needed in a short timeframe. Then suddenly the payables operation is mission-critical and affects the overall costs of doing business.
To accept this as the reality of doing business is wrong.
AP is the litmus test of a business relationship. If the payables process is efficient and responsive, it’s a great relationship. If it’s obstructionist, then good luck convincing people to do business with you, to give you a discount next time, to go an extra mile.
It’s not difficult to do the former. In fact, it’s incredibly painless to transform the payables process. It’s not hard to make that doormat a welcome sign.