Many accounts payable organizations rely on hiring junior personnel to handle supplier payments. It makes sense. AP looks like a cost center within most businesses and the economical approach to controlling costs is to bring on lower salary staff. However, this also introduces risk and control issues where likely multiple people of varied experience and expertise are suddenly handling the company’s bank accounts. A misplaced digit can cause expensive errors and the more payments you make, the greater chance for errors and fraud.

That seems like the absolute wrong approach to something as critical as the conduit for which funds leave your business.

To improve governance on payment and treasury operations, finance and accounting teams must employ digital and physical checkpoints, limit access to banking portals, or alternatively, spend months in research and development cycles kludging together an IT solution that now must be managed. While a company is small, this layered and disparate approach may work fine. However, as the company grows or expands through acquisition, requiring the CFO to draft payments and sign off on every transaction can be a complete waste of time, not to mention ineffective in establishing true controls rather than just an illusion of security.

How to Add Security and Control to the Supplier Payment Process

The core need for accounts payable is to maintain an infrastructure and workflow based on established signatory rights and IT controls. This should cover everything from invoice and payment approval routing, to logging into banking systems, to tax identity data, to reporting. Once these financial controls are in place, the process of automating and streamlining becomes much simpler. That’s because a best practice is easily definable in software and can be executed at-scale, rather than relying on fallible human beings to remember every condition.

Here are the key factors to employ to maintain greater control and security into the entire supplier payment operation.

  • Create an application firewall for accessing banking portals for wire transfers, ACH, check printing, etc.
  • Maintain detail transaction records of payments and payment errors
  • Screen payees and transactions for fraud against national blacklists (i.e. OFAC)
  • Reduce approval cycle friction in paying partners and suppliers
  • Reduce reliance on email/phone communications to gather critical data from suppliers
  • Oversee rules for multiple subsidaries or corporate entities
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