This article is reprinted/republished by the express written permission of IOMA (The Institute of Management & Administration). ©2010; for more information about IOMA publications visit www.ioma.com

 

Economic tough times mean AP departments are running extremely lean and mean. The concept of "doing more with less" has never been more of a challenge. "Downsizing has made us work smarter and required us to ask all employees to work a little more, a little faster, and a little more attentively" is the way one AP manager sums it up in a nutshell.

AP managers were asked by IOMA how they are faring in this challenging environment, and they shared their tips for successfully keeping their heads above water. The suggestions offered by these professionals fell into three categories: the daily workload, managing the staff, and AP systems. Many of these success tips can be used at AP departments of all shapes and sizes.

 

Daily Workload

Special and rush check requests are a fact of daily AP life. As most AP professionals know, this can take way too much time. Several managers we spoke to found ways to reduce this burden. "Handling increased AP volumes while maintaining a high level of service has been a challenge," says the AP supervisor of a large health care service company. "By increased communication with other departments to minimize noncritical requests and assembling a solid AP foundation, we were able to maintain our high level of service to employees and vendors without sacrificing turnaround time," she continues.

The AP manager at a large Illinois company also cuts down on out-of-the-ordinary requests in a very simple manner. "We ask departments to reduce the number of special request payments and to plan better or wait for normal checks to be issued," he says. At both these firms, improved communication with other departments helped alleviate the bottlenecks.

The senior accountant at a trade association was faced with the challenge of handling the AP responsibilities for two additional companies with no additional personnel. She was able to do this by adding a check run for those two companies every other week. It worked.

The finance team leader from a Kentucky company was also faced with substantially increased volume with less staff. The first phase of overcoming this obstacle was a switch from three-way matching to two-way matching, a technique known as Evaluated Receipt Settlement (ERS) or "pay-on-receipt." She hopes this will increase productivity and thus free the existing staff to take on additional responsibilities.

The budget and cost accounting manager from a midsize insurance company found a simple way to deal with the problems that result from increased turnaround time. "When we cut staff," explains this manager, "our turnaround time increased. This was not well received by other departments." This expected response was countered by an education effort that helped other departments develop "appropriate expectations." Once everyone knew what to expect, there were fewer complaints.

 

Managing the Staff

A more efficient use of existing personnel has helped many companies better utilize their smaller AP staffs, and some found ways to augment their existing staff. "Our problem was understaffing," says the director of credit and cash management "and it was solved through a restructuring of responsibilities."

Others, such as the accounting manager at a Pennsylvania defense contractor, solved problems the old-fashioned way. "We had to introduce a new computer system while trying to maintain current processing of vouchers and checks and absorbing additional duties," explains this professional. "This was solved by everyone involved working a considerable amount of overtime."

While working many hours of required overtime can lead to resentment if it goes on for too long, it is often an excellent solution to a short-term problem, especially if staff members are paid for the time or are able to accrue additional vacation time. This additional compensation can actually improve morale.

However, when the problem is ongoing, overtime is not necessarily the answer. The senior accounting assistant for a food service distributor in South Carolina alleviated the short staffing situation by adding staff at a lower level. He hired a college student and a full-time assistant who spent 50 percent of her time in AP.

Those AP managers who must deal not only with less staff but intractable supervisors as well have their hands full. The controller for an analytical instruments company in California revealed how he dealt with this headache. "Our biggest problem was managing, in a downsizing environment, an increased workload due to purchases for a newly introduced product." Adding to the tension was "an autocratic supervisor who was inflexible," is the way he describes the situation he faced.

The solution he came up with was one that made everyone happy. "We moved the supervisor into general accounting and added AP to the cost accounting supervisor’s responsibilities. Less supervision has helped the AP clerks to grow and think for themselves." This not only improved the productivity of the department, but the morale as well.

 

Systems Changes

All cutting-edge AP departments have turned in varying degrees to automation to improve their productivity and reduce errors. "We are forced to reduce staff but have made some progress through automation of the purchasing and AP functions," explains the director of a technology manufacturing firm in Texas. She is not alone. The corporate controller for an audio equipment manufacturer who has to process a much greater volume with the same staff says, "We have partially solved our problem by working with IT to design and implement software to streamline AP processes."

Some managers have used the difficulties associated with an increased workload as an incentive to reengineer their whole process. We repeatedly hear stories of those miracle workers who are able to reduce their staffing requirements by up to 50 percent while providing their associates with a challenging work environment. And they don’t outsource the work.

Here’s how the AP manager for a North Carolina ladies apparel manufacturer rose to the occasion. "The increase in the AP workload is a challenge, along with additional responsibilities that have come our way. We are currently getting automated solutions and online processes that will eliminate much of the keying. We have already changed the workflow to system matching instead of manual matching," explains this savvy manager.

 

Final Point

While, at first glance, "doing more with less" might seem like an albatross, shrewd AP managers will see it as an opportunity. They will marshal all their resources—especially personnel and technology—and structure a new, more meaningful workplace.

 

# # #

• Back to Accounts Payable Articles Index