Nearly one-fourth of the way into the 21st century, accounts payable work has evolved into a specialized, hybrid role. Today, an AP specialist can be as much the person who ensures bills get paid as they are compliance officers, data analysts, and corporate strategists. They’ll handle expense reimbursements, issue forms 1042 and 1099, report and remit about unclaimed property, monitor sales and use tax, and more.
Join us as we go over the basics of accounts payable work, how the position’s evolved in recent decades, and the nuanced roles for AP specialists in 2020 and beyond.
Accounts Payable: The Basics
At perhaps the most fundamental level, the accounts payable function is about helping make sure the company processes payments or sends out checks to its vendors in a timely manner.
Here are some basic facts about AP work.
Requirements and Qualifications
An accounting background isn’t required to work in accounts payable. Nor is a four-year college degree. While either of these things can certainly be helpful to excel in the profession, AP work can be an entry-level position, with only a high school diploma needed at some companies, according to Glassdoor. AP jobs can be a great gateway into eventual higher-level operational and financial work for businesses.
That said, there are a few requirements and qualifications that will show up in accounts payable job descriptions. Temporary staffing giant Robert Half International notes, “Whilst a degree isn’t mandatory for an Accounts Payable role, an understanding of basic bookkeeping and accounting skills is required.” Robert Half also states that degrees in Finance, Economics, Business Studies, or Accounting can be useful for doing accounts payable work.
Accounts Payable Specialist Job Description, Duties, and Responsibilities
An accounts payable specialist isn’t necessarily a certified public accountant, controller, or chief financial officer. But their work sometimes isn’t that far off.
As ZipRecruiter notes, AP specialists are “in charge of managing financial records.” The site goes on to note duties and responsibilities such as:
- Making sure every bill gets paid;
- Ensuring every invoice number is accounted for;
- Preparing bills, invoices, and financial statements;
- Managing ledger balances;
- Checking for financial discrepancies;
- Organizing databases.
(This all can be somewhat interchangeable with an accounts payable clerk job description, as seen on Monster, it’s worth noting.)
This is just the tip of the iceberg, so to speak. AP specialists also must monitor internal systems for their companies to ensure when money has been deposited for check runs. Failing to do this can lead to bounced checks, fees, and aggravated vendors.
These workers also must be mindful of when deadlines for early payment discounts loom. One example of these discounts is 1%/10 Net 30, which Investopedia defines as “if the bill is paid within 10 days, there is a 1% discount. Otherwise, the total amount is due within 30 days.”
Other responsibilities include finding and matching necessary documentation to prove invoices valid and that work, goods, or services were agreed to. This last point matters particularly, as businesses can be hit particularly hard by fraudulent accounts payable charges — $7 billion annually in recent years.
Accounts Payable Salary — and How Their Value Often Far Surpasses This
For anyone curious, here are some figures:
- The U.S. Bureau of Labor Statistics noted the median bookkeeping, auditing, and accounting, including accounts payable clerk salary at $41,320 per year, or $19.82 an hour in 2019;
- Accountants and auditors make considerably more, with the BLS calculating their median pay at $34.40 an hour, or $71,550 a year;
- Management fares best, with Salary.com reporting the average accounts payable manager salary as of July 2020 at $89,331.
It’s safe to say that a good accounts payable specialist is worth a whole lot more than the average accounts payable specialist salary.
After all, the best AP specialists ensure that invoices rarely, if ever, go missing or unpaid. They do whatever it takes to efficiently match records, watch for money to be deposited so they can cut checks and make remittances in time to receive early payment discounts.
But even the best AP specialists can only do so much.
Accounts Payable Role Development Over the Years: From Clerks to Strategic Partners
In some capacity, accounts payable work has existed as long as there have been office jobs (which originated in America with the development of the railroad in the 19th century, as Smithsonian Education notes.)
There’s seemingly always needed to be at least someone in offices to write checks and ensure businesses are paying suppliers, vendors, and independent contractors. Indeed, newspapers as far back as the early 1900s in America advertised for accounts payable jobs. One ad, in the Boston Globe of May 15, 1928 requests a woman with retail experience to serve as an accounts payable clerk at compensation of $18 to $22, presumably per week.
It’s safe to say that accounts payable work has evolved considerably in the decades since. Here’s a loose chronology to where things are today.
When Electronic Data Became a Commodity
Perhaps the modern era for accounts payable work began in the 1960s, with the development in that decade of electronic data interchange, or EDI systems, which tied in with production of early computers. The Toronto Post noted in 1976, while early EDI systems were still in planning, that “common Canada-U.S. trade procedures using computers rather than paper to transmit information on trade shipments could cut documentation costs by 75 percent.”
This didn’t mean that accounts payable work became sophisticated and data-driven overnight. A lot of the records used in AP work, primarily invoices and receipts, remained paper-based for decades thereafter (and many companies — particularly small businesses, according to the Association for Financial Professionals — still cling to arcane, paper-based practices, even in 2020.)
Anyone who’s done accounts payable work might grimace at memories of trudging into company basements or back rooms where rows upon rows of filing cabinets sat. Sometimes, these cabinets could hold decades worth of invoices and receipts. Not surprisingly, this process was fraught with the potential for error, lost records, and hidden expense for businesses.
Transformation due to Computers and the Internet
The personal computing revolution accelerated in the 1980s and ‘90s, with the emergence of the World Wide Web.
With computers starting to become common-place in offices, accounts payable work entered a new era, with many companies developing proprietary internal systems. In these systems, invoices could be entered, tracked, and scheduled for payment.
Computers also allowed for exponentially higher levels of invoice processing, with an ad from an Australian paper in 1999 seeking a clerk who could handle “data entry speed of light at 10,000” keystrokes per hour.
How Accounts Payable Started to Lag Behind the Times
Even with the advent of computers, accounts payable started to lag behind the times in the early 2000s. The reason for this: AP departments, like many other facets of life, were slow to adapt and take full advantage of technology such as automation.
In recent years, automation has revolutionized accounts payable, removing the need for AP staff to have to key in data — with data entry being, as we noted earlier, a dreaded task for many AP employees. The shift has allow AP specialists to focus on more high-level tasks and become strategic partners in their company’s success.
6 Roles for Accounts Payable in 2020 and Beyond
These days, AP specialists are wearing more hats than ever, which follows general trends common across the business spectrum in recent years. Few are the employees who really specialize in one thing anymore.
Here’s some of the latest job duties for accounts payable folk.
Data Consolidation and Analysis
Businesses are in the midst of a data revolution and accounts payable specialists are at the forefront of this. This is because of the mountain of data that they traffic in over the course of their jobs each day, with the average business processing hundreds if not thousands of invoices per month.
As the website AccountingTools notes, AP specialists can pull data to examine such things as:
- Late payment fees;
- Whether their companies are wasting money on payables turnover;
- Duplicate payments;
- Potential fraud, if employees and suppliers share the same address.
Leveraging data is another way that accounts payable specialists can help companies protect against wasting money and outright fraud.
Traditionally, invoice approval can be a grindingly slow process, sometimes as long as a month. Increasingly, AP specialists and their companies are turning to automation to close this gap, with automation able to make invoicing five times faster.
AP automation improves the approval process in other ways, too. It allows for reminders, learning approval workflows, identifying duplicate invoices, and pulling purchase order or supporting documents from other financial, or enterprise resource planning systems.
Perhaps AP automation’s greatest benefit is that it allows automatic capture and coding of invoices into accounting systems. It goes without saying that the process is faster and more accurate than anything a human can do.
There’s no shortage of local, state, and federal regulations for businesses to adhere to these days. Accounts payable workers, with their keen eye for locating supporting documentation and records, are great resources for companies to deploy to ensure they’re complying with whatever they have to.
Payment Processing Alignment
Ideally, accounts payable shouldn’t exist in a silo. Awareness and mindfulness related to past purchases should help guide companies to better future purchases, whether it’s having a clearer idea on price points, order sizes, or other factors. Accounts payable specialists can play a key role in this alignment.
AP specialists can be used by companies to guard against fraud by common employees, executives, and third-party actors. AllBusiness.com notes that fraud detection and prevention strategies to train AP personnel include monthly reconciliations, transaction tracing, and identifying check amounts that fall just below thresholds for reviewing payments.
At the end of the day, AP specialists are helping guide corporate strategy toward a smarter, more data-driven business world. Through digitization and now automation, companies can process invoices exponentially faster and better.
Gone are the days accounts payable clerks are simple order takers earning $18 a week. Accounts payable specialists in 2020 are truly multi-faceted evangelists for better times.
Want to make your accounts payable operations five times as efficient? Contact us at Stampli today!