Where accounts payable breaks: handoffs, exceptions and workarounds

Accounts payable rarely breaks inside a single step. It breaks where work passes between people: purchasing to receiving, receiving to the payables desk, the desk to approvers, and payables to the ledger. Most rework traces back to an invoice that arrived before the paperwork that should justify it.

Supplier records drift away from reality

The supplier master file is shared by purchasing, payables and treasury. Each group assumes another owns it. Duplicate records appear when a supplier changes its trading name or opens a new remittance address. Bank detail changes come in by email and get keyed without a callback.

To spot this, search the master file for suppliers that share a tax identifier or a bank account. Look at who made the most recent edits to payment details. If clerks in several teams can change bank data, the control exists only on paper.

Invoices that cannot be matched

Matching an invoice to its purchase order and goods receipt sounds mechanical. In practice the receipt is often missing. Warehouse or site staff confirm delivery late, or never, because nothing in their own work depends on it. Price differences follow when buyers agree a new rate by phone and leave the order unchanged.

The evidence sits in the hold reasons. When most blocked invoices carry a "no receipt" flag, the fault lies upstream of payables. Purchase orders raised after the invoice date point to buying first and paperwork later.

The exception queue becomes a parking lot

Every system has a place for invoices that fail validation. Over time it fills with items nobody owns. Staff resolve the easy ones and leave the awkward cases. Some get paid without full checks once a supplier starts chasing.

Age the queue by date received. Old items with no notes mean no one is working them. A queue that empties suddenly before period end usually means invoices were forced through.

Approvals routed to the wrong person, or to nobody

Approval rules are set up once and rarely revisited. People move roles. Cost centres get merged. Invoices then wait for a manager who has left, or reach someone with no idea what was bought.

Watch for approvals granted by delegates far outside the spending area. Bulk approvals clicked through in one sitting also deserve a look. Repeated reminders to one approver suggest the routing table is stale.

Payments made outside the run

Urgent manual payments are the most common workaround. A supplier threatens to stop deliveries, so someone arranges a one-off transfer. The invoice is often still in the system and gets paid again in the scheduled run.

Compare manual payments against invoices later paid through the normal run. Credit notes from suppliers returning money are a strong hint. So is a payables clerk who keeps a private spreadsheet of "already paid" items.

Accruals and reversals at period end

Goods received but not yet invoiced need an accrual. That estimate depends on receipt data, which is exactly the data that tends to be missing. Reversals are set up manually and sometimes forgotten, so the expense lands twice.

Check whether the reversing entries in the new period match the accruals posted in the old one. Large manual journals prepared by payables staff close to the deadline show the subledger and the general ledger disagree.

Tax data that is wrong from the start

Tax treatment is decided when the supplier is set up and when the invoice is coded. Missing tax identifiers or a wrong supplier classification surface only at year end, when reporting forms must go to the tax authority and to payees. Fixing it then means chasing suppliers who may no longer trade.

A rush of requests for tax identifiers late in the year tells the story. Corrected forms issued after the original filing confirm it.

Supplier inquiries as an early warning

Supplier calls and statement queries are not a side task. They reveal which invoices never reached the system, which sit on hold, and which were paid to the wrong account. When inquiry volume rises, the cause is almost always further back in the process.

Tag each inquiry with its root cause. Patterns appear quickly once someone looks.

Ledger adjustments that hide the problem

When disbursement detail fails to reconcile to the ledger, the gap is often cleared with a journal and a vague description. The reconciliation then looks clean while the underlying error repeats. Recurring adjustments to the same accounts, with similar narratives each period, signal a fault that was patched, not fixed. Missing invoice images or approval evidence during an audit sample show the retention side has the same weakness.

Questions to ask the people who run it

The documented process and the lived one differ most here. Ask these at the desk, not in a workshop.

• What happens to an invoice that arrives with no purchase order?
• Who gets called when a receipt is missing, and how often does that call work?
• Which suppliers are paid outside the normal run, and who decides?
• Where are the notes kept on invoices that are on hold?
• How is a request to change supplier bank details checked before it is entered?
• Which approvers are known to be slow, and what is done to get around them?
• What gets cleaned up at period end that should have been caught earlier?
• Is there any spreadsheet or inbox that the system does not know about?

The answers to the last question usually show where the real process lives.

APQC's Process Classification Framework® (PCF) is an open standard developed by APQC, a nonprofit that promotes benchmarking and best practices worldwide. To download the full PCF or to view definitions and measures, please visit www.apqc.org/pcf.