How to Structure an Accounts Payable Department

Some AP teams consist of one person, while others consist of 10 or more experts. It’s largely the size of the organization that dictates the size of the AP team, but all accounts payable departments should be able to complete key tasks, such as:

• Creating vendor profiles in the Enterprise Resource Planning software and updating key contact information as needed.
• Processing, approving, and paying invoices by the agreed-upon due date.
• Building financial reports each month to provide clarity to leadership around cash outflows and outstanding debts owed.
• Managing travel costs and other business reimbursements for employees.

What to Think About When Structuring an AP Department

With so much to do, AP teams need to be as efficient as possible, which is why structuring them well is so important. There are a few key things to consider when building – or rebuilding – your AP department:

Organizational Size

As mentioned above, the size of your business will directly impact your AP needs. A company that processes 10 invoices a month and employs 5 people will likely have a very small AP team. However, a company that employs thousands and processes multiple invoices each day will need more manpower behind the AP function.

Transaction Volume and Complexity

Every vendor or supplier you do business with will send an invoice and expect to be paid promptly for the goods or services provided. Do you work with a large number of vendors to collect raw materials or tap into certain services? What’s the payment schedule for these vendors? Understanding the details behind each transaction will help you architect the perfect AP team for your needs.

Role of Tech

Accounts payable is a function that’s ripe for automation and artificial intelligence. Though important, many of the tasks are repetitive in nature, making them great candidates for technology-enhanced efficiency. If you’re able to automate some of the manual tasks, you’ll need fewer people in AP roles overall.

Risk Management Needs

Because AP is a highly regulated business function, AP teams need to be able to operate in a way that’s compliant with federal, state, and local laws. Transaction tracking and all associated accounting have to be spot on, and investing in a team that can help manage risk is always worth it.

Break Down of Roles & Responsibilities

If you have the following roles covered, you’re probably good to go. If you need more support – add more! It all depends on what your business needs are, but these are great starting points for an AP team.

Accounts Payable Manager

Having someone to lead the AP function can make a world of difference. AP managers wear a lot of hats; some days they’ll be processing invoices alongside their teams, and others they’ll be piloting new automation technologies to make things run more smoothly. You’ll need someone who is strategic enough to see the big picture but detailed enough to catch a payment error.

Accounts Payable Clerk

The go-to resource for all things invoice processing and payment disbursements, AP clerks are the ones who do the day-to-day tasks in AP departments. They make sure that everything looks good in your financial systems and that payments are successfully getting to vendors on time.

Specialist Roles

If your business partnerships are complex, or if your AP team hands a lot of tailored payment schedules or payment exceptions, you may need an AP specialist to manage the lift required.

Separation of Duties

No matter how you decide to structure your AP team, there’s one thing that must be a top priority: the separation of duties within the function. For instance, the person reviewing incoming invoices shouldn’t be the same person who approves those invoices. Further, the person that disburses payments to vendors should also be different from the one that makes payment approvals. Keep a clear paper trail and don’t let conflicts of interest jeopardize your business’s financials!

For an additional layer of security, removing the risk of human error or fraud, Accounts Payable teams should invest in a payment verification technology. This ensures teams always pay the right vendors into the correct accounts, while reducing the time required to verify accounts prior to processing payments.

Summary

• The size of your business and the complexity of your vendor transactions will help determine the overall size and structure of your AP team.
• Automation and AI can enhance efficiency in AP processes, reducing the need for manual intervention and streamlining operations.
• Key roles within an AP team include an AP Manager, AP Clerks, and specialists, with a strong emphasis on the separation of duties to prevent conflicts of interest and ensure accuracy.