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Invoice statement example for Operations

dear bill i hope you're doing well i'm emailing you because we are yet to receive payments on three outstanding invoices attached the invoices are now past due by over 120 days please send us a proof of payment on these invoices or we will be forced to forward these invoices to a collection agency oh i'm scared now you'll notice this passive aggressive tone and emails from vendors when they're asking about their payments and they're almost always asking you how you're doing as if they care the title of this video is where is my money a day in the life of an accounts payable manager the reason why i put the phrase or question where is my money is pretty obvious and you might have already guessed it yes when you work in accounts payable you will be receiving this question almost on a daily basis from vendors asking you this simple question dude where is my money so if you work in accounts payable or you'd like to enter the field or maybe if you're just curious about this role in this video i will walk you through an actual day in the life of an accounts payable manager but then most importantly i'm gonna show you what you have to do to stand out from the herd and show your manager that you can handle way more than just accounts payable i've been a corporate controller for the past six or seven years and have been in accounting field for the past 15 years if you've been following the channel you'll know that i'm a cpa working in new york city and that i started working in public accounting at pwc and now work as a corporate controller at a software company this video is based on my own experience in the older times and before the development of modern day commerce when you buy something you pay for it on the spot in cash which makes a lot of sense but with the increasing complexity of today's corporate structures it becomes almost impossible for a company to be able to pay in cash on the spot for two reasons one the invoice from the vendor needs to go through a series of approvals and two because the company needs a little bit of time so that it can manage its cash flow collects from customers and pays vendors in essence accounts payable is an iou you deliver the goods or service to me and i promise you cross my heart and hope to die that i'll pay you in the future alright enough with the chit chat and let's get into it when you walk into the office in the morning as an accounts payable manager you're most likely to head over first to the kitchen to grab yourself a second cup of coffee you're gonna need it as there is much work to do next you'll fire up your laptop or computer and open your email application the first thing you'll pay attention to are the somewhat angry emails from vendors unless of course your company is flush with cash and you have a highly organized team that never pays any invoice late following up requires research that you'll take on a case-by-case basis you will let the vendor know of the reason of the delayed payment it might be that the invoice is missing the invoice number or maybe the amount that's in the invoice is listed incorrectly compared to the purchase order then once you are done researching and responding to vendors emails you'll begin handling the new batch of invoices that you just received some of these invoices were received by email while some just came in through the regular mail and who is still sending invoices by a regular mail that baffles me and it makes me wonder which century we're living in but unfortunately you'll have a good amount of invoices coming through regular mail which now will force you to take it open it up and scan it so you can keep a soft copy for your records now before you begin processing these invoices it's almost always time for a third cup of coffee and you'll notice that when you work in accounting your caffeine intake will spike when we say that you'll be processing these invoices we mean two things one you'll be seeking approval from the business side meaning making sure that somebody indeed engaged in buying these goods or services and two you'll be coding the invoice into the accounting system and when i say coding into the accounting system i mean selecting the gl account department entity location etc i am actually in the process of creating an online course to teach you the best practices when it comes to accounts payable so if you're interested be sure to check my website periodically link in the description below the next part of your day will be making payments on the invoices that have been already approved from the business side now when it comes to making payments it's worth noting that the process of making payments has changed dramatically over the last 10 to 20 years a dramatic but a simple way to describe this change is that your grandfather used to make payments by cutting a physical check your father will be sending a wire directly from the bank website but today in 2021 and beyond if you're a modern accountant you are neither cutting a cheque nor sending a wire by the bank website instead you are processing the invoices and paying them from the same platform which is either your erp software or a platform such as build.com to polti koopa and i'll explain all that here in a minute now your day is coming to a close you grab your things and you head home tomorrow is a much more fun day why because tomorrow is part of month end and you'll be doing account reconciliations account reconciliation is a form of internal control the two main accounts that you'll be reconciling is the cash account and the accounts payable account when cash is reconciled meaning that the balance on the books and records equal the ending balance in the bank statement it signals that all the cash disbursements throughout the month have been accounted for on the books and records the second bit of reconciliation is reconciling the accounts payable balance on the balance sheet to the accounts payable balance on the aging schedule and this helps you catch a host of errors and misstatements that could happen with cash disbursements now this is my favorite part of the video which is the parts where i share with you my knowledge and best practices in doing accounts payable and this is how you can stand out from the herd and show your boss that you can do way more than just accounts payable and these are going to be four tips and tricks the first one is about making payments to vendor the method of making payments like we said in the past the payments used to be made by a check you cut a check and then after that you would transition to making payments via triggering an ach or a wire directly on the bank website right and this is the way of yesterday but the way of today in 2021 and beyond is making payments directly from the same platform where you process your invoices so if you're processing your invoices meaning entering your invoices in an erp such as netsuite you want to make the payments directly from netsuite meaning that you are connecting netsuite to your bank account uh and entering the vendor information and netsuite or whatever other erp you're using and triggering the payments this way if you don't want to use an erp software to do it you can use a secondary system such as build.com or to polti or koopa there are many platforms that can do this where you can process the invoice of the vendor it will sync into your erp and the same platform can make the payment right and this cuts down the time needed to process the invoice dramatically because now you're not having to take an extra step for each vendor and go and set up the payments so that's the first tip the second one is regarding the self-onboarding of the vendor so in the past when we onboarded a vendor we used to get the information from the vendor through a pdf or email and do it ourselves meaning take the information and put it in in the system their address um email banking information right the way over the future is that you want the vendors to do it themselves self-onboarding right you just send them a link and then they fill out all the information and this will cut out cut down the error right so the errors can come in in the banking information and this is pretty dangerous if you put in the wrong digits and the money goes in the wrong direction you want to make sure the vendor is entering the information themselves this can be achieved by using build.com to polti koopa there are many platforms now that allow you to collect the vendor information and send the payments based on this information so that you're not subject to making any kind of error and then the third tip is appeal process or a purchase order process so usually at a smaller company you don't have a purchase order process unless we're dealing with materials and inventory but for service based companies you're usually relying on getting the invoices from vendor and then trying to get the approval from the business side after you've already gotten the invoice now a better way is to create a po process or a purchase order process and you can do that by using a google form where you have the person who wants to request spending will go in fill out a google form and then the output of that will come to you and finance you can then check whether that spend is already in the budget or accounted for and get the approval before the spend happens and this is called manage spending right so you are getting the approval before the spending takes place rather than trying to um chase for the approval after the invoice has come from the vendor when it's too late so uh in my opinion it's there's no company that's too small for a purchase order process uh if you're making let's say five million or more in revenue a year it's time for you to begin adopting uh process for purchase orders and then last but not least is the use of kpis or key performance indicators to measure success in accounts payable if you're not using kpis today or key performance indicators in accounts payable you need to begin and these are kpis such as dpo or days payable outstanding to measure the amount of time it takes to get the invoice paid from the time you receive the invoice uh error rate to measure the amount or the occurrence of errors and making payments to vendors and these are just ways to show to your company and to your boss empirically the success of accounts payable operation and that's why we talk a lot about kpis in my online courses i'm going to leave a link down in the description so go ahead and check that out as well thanks for watching i'll see you in the next video you