• North America
    • United Kingdom
    • Europe
  • Solutions
    • Accounts Payable AutomationEnd-to-end, invoice-based payments designed for growing companies
      • Supplier Management IconSupplier Management
      • Invoice IconInvoice Management
      • PO Matching IconPurchase Order Matching
      • Global Payouts IconPayment Remittance
      • Payment Reconciliation IconPayment Reconciliation
    • Purchase Order ManagementControl and visibility over corporate spend
    • Global Partner PaymentsScalable payment solutions for creator, ad tech, sharing and marketplaces economy
      • Supplier Management IconPartner Management
      • Global Payouts IconGlobal Payments
      • Fraud Detection IconFraud Detection
      • Self Billing IconSelf-Billing Module
      • Tax Compliant IconTax and VAT Compliance
    • Tipalti CardManage and reconcile spend, gain visibility, and receive cash-back
  • Technology
    • Overview
      • The Tipalti PlatformGlobal, scalable, and fully automated
    • Features
      • Multi Entity IconMulti-Entity Architecture
      • Financial Controls IconFinancial Controls
      • Payment API IconPayment API
      • Secure Cloud IconSecure Cloud
      • MSB IconMoney Services Business
      • AI IconPi Payables Intelligence
    • Integrations
      • ERP & Accounting
      • Oracle NetSuite
      • Sage Intacct
      • QuickBooks
      • Microsoft Dynamics
      • Sage Accounting
      • Xero Accounting
      • Performance Marketing
      • Custom Integrations
  • Why Tipalti
    • Overview
      • Why TipaltiA modern, holistic, powerful payables solution that scales with your changing business needs
      • Customer StoriesSee how we transform finance operations
    • Benefits
      • Accolades
      • Invoice-Based Workflow
      • Performance-Based Workflow
      • Benefits by Role
    • Additional Services
      • Currency Management
      • FX Hedging
      • Implementation Services
      • Supplier Enablement Program
    • Industries
      • Advertising Technology
      • Affiliate and Influencer Networks
      • Business Services
      • Ecommerce and Retail
      • Education
      • Financial Services
      • Healthcare
      • Manufacturing and Wholesale
      • Marketplaces and Gig Economy
      • Online Services
      • Software and Technology
      • Video and Digital Media
      • Video Gaming
  • Resources
    • Blog
      • The FinTalk BlogStrategy and trends in payments
    • Tools
      • Cost Per Invoice Calculator
      • Payment Error Calculator
    • Guides
      • What is AP Automation?
      • Compare Payment Methods
      • Future of Finance
      • Destination IPO
      • Payments Across Borders
      • The Total Guide to ERP Integration
  • Company
    • About Us
      • About Tipalti
      • Careers
      • Partnerships
      • Contact Us
    • Help
      • Support
      • FAQs
    • News & Events
      • Events
      • Newsroom
  • Login
  • Get Started
Get Started

The AP Department's Functions & Structure in Modern Business


We've paired this article with a comprehensive guide to accounts payable. Get your copy of the Accounts Payable Survival Guide!
Get the FREE guide
Home / Accounts Payable Hub / Accounts Payable Department

A company’s accounts payable refers to all of the company’s purchases made on credit, for which they still owe money. From vendor invoices to partner payments, running an efficient, accurate and secure accounts payable process is critical to a company’s stability. 

That’s where the Accounts Payable department comes in and ensures that all outstanding invoices are paid on time.

What is the Accounts Payable Department? 

The accounts payable department ensures that payments are properly approved and processed and keeps track of what’s owed to vendors, ultimately controlling expenses for an accurate balance sheet. This includes collecting tax information from their suppliers, reimbursing employees for any small business-related expenses, and preparing financial reports related to accounts payable. 

Accounts Payable Department Structure 

There are two main objectives when structuring or restructuring your accounts payable department:

  1. Preventing fraud through the separation of duties both inside and outside the accounts payable department structure. Proper segregation of duties is a requirement for good internal controls. 

Although achieving strong internal controls is the goal for businesses of all sizes, it’s more difficult for smaller businesses. Startups and businesses with a limited number of employees can’t separate duties to the extent that larger, more established companies can. As they’re growing, startups will hire to adequately staff departments, achieving better internal controls.

  1. Matching responsibilities and roles with a redefined automated accounts payable process workflow. This will yield impressive time savings by:
  • reducing or eliminating manual invoice processing for each account payable 
  • stopping repetitive vendor inquiries about invoice payment date requiring follow-up
  • removing inefficient workflow process bottlenecks

Outside vs. Inside Accounts Payable Tasks

Separation of duties should include the following to prevent paying fraudulent invoices and expenses:

TaskOutside Accounts Payable Inside Accounts Payable
Issuing purchase orders ✓
Establishing vendor master file and adding vendors with vendor name and contact information✓
Preparing receiving reports as goods are received✓
Processing and collecting accounts receivable ✓
Processing vendor invoices in the payable system✓
Matching invoices, purchase orders, and receiving reports✓
Approving vendor invoices for payment✓
Evaluating which early payment discounts make sense✓
Communicating with vendors (suppliers)✓✓
Paying vendor invoices in batches or via “bill pay”after vendor payment approvals (with good early payment discounts or timely payment terms considering due dates)✓
Generating financial reports for cash requirements and cash disbursements ✓✓
Reconciling accounts payable to the general accounting ledger✓
Receiving, processing, and monitoring W-9 supplier tax forms for compliance✓✓
Handling the petty cash fund, including small cash disbursements as business expense reimbursement ✓
Monitoring, approving, and bookkeeping for the petty cash fund ✓
Preparing checks to replenish the approved petty cash fund  requests (with expense reimbursement vouchers attached)✓
Approving travel reimbursement reports✓
Paying travel and business expense reports payments ✓
Approving and reconciling purchasing cards (P-cards) for office supplies and other business expenses✓
Paying purchasing card (P-card) credit cards or debit cards✓

The above table also answers the question: What are the duties of the accounts payable department? Checked items in the Inside Accounts Payable column cover the entire accounts payable cycle. These internal control considerations include both businesses that perform manual data entry of vendor invoices and companies that run efficient and secure AP automation software using electronic documents.

Accounts payable automation software offers not only time-saving and cost-saving but also improved internal control features. Ten Internal control enhancements from AP automation software are:

  1. improved system security
  2. supplier verification through a KPMG system
  3. self-service supplier onboarding, submission of contact information and W-9 forms, and uploading of vendor invoices
  4. the reduction of data inaccuracy caused by human error
  5. better (automated) recognition of duplicate invoices
  6. improved identification of inactive vendors in the vendor master file for recommended deletion to lessen fraud risk
  7. a stronger approval process for payments
  8. better visualization of spend management
  9. automatic reconciliation of  accounts payable to the general ledger for more timely and accurate financial statements
  10. built-in audit trails

This list of internal control improvements from accounts payable automation software is not all-inclusive. You’ll discover more ways to improve internal controls.

Tips to Run an Accounts Payable Department with AP Automation

The accounts payable department streamlines its operations by using accounts payable automation software. The way that accounts payable handles core business processes is changing rapidly. To get ahead of the curve and adapt to these changes, consider a new organizational chart structure for the AP department. Shifting roles for AP better aligns with financial management’s analytic and strategic goals.  

AP automation software uses robotic process automation (RPA) by applying standard rules to routine accounts payable processes. Automation and robots may scare some members of the accounts payable staff who fear the loss of their jobs when work is automated with new systems. 

The communication should focus on how accounts payable automation software will eliminate many frustrating tasks that prevent the AP team from getting their job done. 

Accounts Payable Challenges:

  • responding to constant hounding of  incoming vendor calls about when they’ll receive payments,
  • following up repeatedly with approvers to get invoices approved,
  • chasing down lost paperwork,
  • manually keying in data, including invoices, and
  • requesting missing W-9 information from vendors.

These challenges in the accounts payable department can be easily overcome through AP automation to reach accounts payable department goals and objectives. 

When communicating, share stories about how the accounts payable team can elevate its job. New functions of the accounts payable department include monitoring the RPA and payables processes and analyzing data to suggest potential cost savings. 

The time and cost savings will convince finance and accounting. 

AP Automation Benefits:

  • Time savings include not having to reconcile accounts payable to the company’s balance sheet (general ledger)
  • Closing the books faster
  • Positive software investment ROI
  • CFO will save time on vendor invoice payment approvals and improve cash flow management

Positive ROI from using the Tipalti AP automation app easily justifies the investment. AP automation software can save 80% on supplier invoice processing and help accounting close the books 25% faster. That frees up more time for value-adding strategic initiatives, decision-support, and financial analysis & planning (FP&A). Your company will also save money by taking worthwhile accounts payable discounts (like 2/10 net 30) and not paying duplicate or fraudulent invoices. 

The next challenge is how to structure the accounts payable department optimally when using an AP automation software app. Try using the seven steps below for how to organize the accounts payable department in a new small business or restructure your existing accounts payable organization.

7 Steps for Organizing Your AP Department

  1. Assign each designated accounts payable task or role in the above table to a job. 
  2. Update each accounts payable job description to remove manual task processing from necessary automated accounts payable department duties. 
  3. Add new RPA and payables monitoring and analytic responsibilities to the accounts payable department functions. 
  4. Decide how many hours will be saved in performing accounts payable department responsibilities by each job. 
  5. Assign the number of AP staffers required to fill each job role. 
  6. Reassign current staff to new positions in accounting or other business departments if their job is downsized. 
  7. Revise your budget to reflect future hiring reductions, offset by increased staffing you’ll need to process and pay for more supplier purchases as your company grows. 

Managing the accounts payable department through the implementation of AP automation software is a small challenge. You’re on the way to achieving substantial cost savings and internal control improvements for your business. 

About the Author

Barbara Cook

Barbara is currently a financial writer working with successful B2B businesses, including SaaS companies. She is a former CFO for fast-growing tech companies and has Deloitte audit experience. Barbara has an MBA degree from The University of Texas and an active CPA license. When she’s not writing, Barbara likes to research public companies and play social games including Texas hold ‘em poker, bridge, and Mah Jongg.


RELATED ARTICLES

Best Accounting Software for Midsize Businesses in 2023 7 Accounting Best Practices to Streamline Your Accounting Process Top Bill.com Alternatives and Competitors in 2023 AvidXchange vs BILL : Which Product Is the Best Fit for You? Tipalti vs. Airbase: Which Solution Fits You in 2023?The Top Airbase Alternatives in 2023 Best Ways to Pay Your Overseas Suppliers and Vendors A Guide to Streamlining Invoice Management in 2023 Pros & Cons of Accounts Payable Outsourcing vs AP Automation Business Process Automation: Meaning, Examples & Top Processes A Guide to Full Cycle Accounts Payable Process Guide To International Accounts Payable Ultimate 2023 Accounts Payable (AP) Guide: Meaning, Process & Examples What is an Expense Report & How Do You Fill One Out? Accounts Payable Days: What is AP Days & How Is It Calculated?

Footer

Solutions

  • Accounts Payable Automation
  • Global Partner Payments
  • PO Management
  • Tipalti Card

Capabilities

  • Overview
  • Supplier Management
  • Invoice Management
  • PO Matching
  • Self-Billing Module
  • Payment Reconciliation
  • Global Payments
  • Fraud Detection
  • Tax and VAT Compliance

Why Tipalti

  • Why Tipalti
  • Customer Stories
  • Invoice-Based Workflow
  • Performance-Based Workflow
  • Benefits by Role
  • Benefits by Industry
  • Bill.com Alternative

Technology

  • The Tipalti Platform
  • Multi-Entity Architecture
  • Financial Controls
  • Payment API
  • Secure Cloud
  • Money Services Business
  • Pi Payables Intelligence

Resources

  • The FinTalk Blog
  • What is AP Automation?
  • Compare Payment Methods
  • Future of Finance
  • Destination IPO
  • Payments Across Borders
  • The Total Guide to ERP Integration
  • Cost Per Invoice Calculator
  • Payment Error Calculator

Company

  • About Tipalti
  • Careers
  • Partnerships
  • Events
  • Press
  • In The News
  • Media Kit
  • Support
  • FAQs
  • North America
    • United Kingdom
    • Europe
Contact Us
LinkedIn Instagram Facebook Twitter YouTube
We Handled It.
Legal Agreements
|
Cookies Declaration
|
Privacy Policy
|
Payer / Sender Rights
|
Customer Assistance Policy
© 2010–2023 Tipalti Inc.