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HR Party of One is brought to you by BerniePortal.

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What do paying bills and having dinner at the in-laws have in common?

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You may not love it, but you gotta do it.

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Okay, now consider what you prefer: an unexpected and/or inaccurate bill,

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or an unplanned, surprise dinner at your Mother-in-Law’s?

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Look, I have a great relationship with my in-laws! I also have an efficient,

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organized process for managing bills—which, for businesses, is called accounts payable.

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You want to improve your accounts payable management. Every HR professional or

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employer wants to track where the money is going and if it’s a necessary expense. You

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might do this to find areas where you can save money, identify which departments or

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teams are spending the most, or even avoid potential compliance issues.

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Whatever the reason, improving your accounts payable management will help

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your bottom line and allow you to scale organizational growth more effectively.

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So in this episode, let’s cover: What Is Accounts Payable?; and,

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3 Tricks to Help You Improve Accounts Payable Management;

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Let’s get started!

What Is Accounts Payable?

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What Is Accounts Payable?

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Accounts payable is the inverse of accounts receivable. If you watched our episode,

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“Top 5 Ways to Manage Accounts Receivable,” you may remember that accounts receivable is

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the term for payments you expect to receive for services rendered, or whatever your org provides.

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Accounts payable is the money your organization owes to external vendors. By vendors,

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I mean anyone from your internet provider to software platforms used at your org. Vendor is

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an all-encompassing word, but you may have them organized further into subscriptions,

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utility bills, contracted work, and more.

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For example, here at BerniePortal, we use many different vendors. Kajabi is a

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platform that hosts our BernieU courses so that you can take advantage of our free HR

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education opportunities. We also contract with the Hilton in Downtown Nashville to

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reserve event space for Weekdays with Bernie, the ultimate small to midsized HR industry conference.

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And I can’t forget our other vendors, like Nashville Electric, to keep the lights on!

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Despite how different each of those vendors are, they each fall into the accounts payable bucket

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alongside all bills we pay. And that’s only three examples—organizations may

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use hundreds of vendors! Your payroll system, LinkedIn Recruiter account, licensing agency,

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corporate Zoom account, landscapers, mechanic to service company vehicles,

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website hosting platform—I’ll stop there. You know what I mean. Vendors

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are necessary to run a business successfully and must be paid the correct amount on time.

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A small to midsized company may have fewer outgoing payments to track. Still,

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you’re also operating with a smaller team to manage it all. If you’re an

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HR Party of One, your team is very small indeed.

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So, let’s discuss how HR professionals can better manage their accounts payable with three tricks:

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-Start with the End in Mind.

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Evaluate Who’s Responsible for What. ...and Simplify and Centralize Processes.

How to Start with the End in Mind

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3 Tricks to Help You Improve Accounts Payable Management

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How to Start with the End in Mind. To manage your accounts payable better,

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start with the tried-and-true HR go-to: a documented, standardized process. This may

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look different in each org, but the commonality is that it should be strong enough that someone

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can step in and take over if you are out. So, as we progress through this episode,

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know that the ultimate goal is to streamline your current process and document it thoroughly.

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With that being said, let’s dive into the first accounts payable trick:

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One of the 7 Habits from Stephen Covey’s Seven Habits for Highly Effective People is “Start with

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the end in mind.” To quote the book, the concept means “to start with a clear understanding of your

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destination.” Covey intends for his readers to think about the course of

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their lives and their eventual funeral, but I’m going to scale back a-ways from

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that morbid thought. To “start with the end in mind,” let’s think about financial audits.

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Financial audits are an in-depth investigation of your accounts payable and receivable that can

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determine if your company has unbalanced accounts. You want to avoid an unbalanced financial state,

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like if you owe or are owed money by an entity. Most importantly, financial audits

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determine if your organization is compliant or non-compliant with IRS regulations.

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Auditors are accountants who have specific rules and methods to follow when accounting. They are

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subject to GAAP, the USA’s Generally Accepted Accounting Principles. GAAP has 10 principles,

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which you can read more about in the link I left in the description.

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Consider applying these principles whenever you wear your finance hat,

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as they are key to federal, state, and tribal compliance.

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If your organization doesn’t already, think about hiring an accounting firm to do a comprehensive

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audit of your finances each year. Public companies are required by law to submit

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to an independent financial audit every year. Small, private companies may go years without

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a proper audit, which can really throw a wrench into their organization’s revenue potential.

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However, if your organization relies on you to manage finances, here are some

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things auditors need or do that may translate to improving your accounts payable practices:

Improving Your Accounts Payable Practices

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Collect and organize all contracts, agreements, invoice requests, etc.,

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that state your org owes money for any reason, including reimbursement requests and casual

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communications if they exist. Retrieve credit card statements,

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bank statements, cash transaction reports, payroll data reports, job-costing analyses,

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or anything else that shows how funds are spent. Note any issues or discrepancies you already

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know of and collect the documents pertaining to them for easy review.

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If you can stay on top of audits like a pro,

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you can hopefully avoid the scariest pro of them all—the IRS.

Evaluate Who’s Responsible for What

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Evaluate Who’s Responsible for What

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Employers know how essential organization is to success. But for accounts payable,

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it’s not only essential—it’s the end-all-be-all. You must remain organized to pay rent on time,

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renew subscriptions to software annually, request W-9s from parties, and more. You’re responsible

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for hundreds of moving parts. But did you know that you can outsource some of that mental load?

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Consider passing some expense-related duties to the department leaders or

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team managers. Some account payable tasks must remain solely in your hands,

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but not all of them. Discuss implementing a new expense-tracking procedure with your leadership.

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Create a reporting structure that places some of the responsibilities on the managers.

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Ensure each team has documented processes that outline the expenses of each annual subscription,

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plus whatever else they spend on regularly. For example, a company working with sensitive

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populations may require annual background checks for specific teams. The leaders should know

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when the time comes around for me to pay the vendor we use for background checks. Ideally,

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they have provided me access to a shareable document that organizes

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such expenses so I can review it for accuracy or complete an expense report.

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I understand how frustrating it can be to notice a discrepancy on the credit card statement that

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can only be answered by one tiny image file on someone’s cluttered desktop screen. Like,

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what do you MEAN the receipt for renewing our Canva subscription is just sitting on

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your computer and was never forwarded to HR? Or, even more annoying—when employees bring

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you a crumpled receipt from months ago for a meal they had on a work trip that

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they want reimbursed. Why am I getting this Olive Garden receipt from May… in November?

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That vent session brings me to my next point:

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Simplify and Centralize Your Processes It’s the KISS method: Keep It Simple,

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Stupid—I recommend switching Stupid to Silly. Ya know, HR things.

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By centralizing your accounts payable process, you create less room for error. The simpler it is,

Simplify and Centralize Your Processes

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the easier it is to do. One way to centralize account payable management is to reduce the

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ways in which money is spent. By that, I mean cut back on giving out credit cards.

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If only one card can be used for expenses, then you only need to

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collect one statement. Some companies can’t avoid giving corporate cards to folks,

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and that’s fine! This solution is geared toward the random purchases and expenses

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that people shouldn’t be making. While you’re not permitting everyone in the org to buy

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items or try out new software, it may still happen more than your bottom line prefers.

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For SMBs, it might be useful to set up a password manager. That way, you can

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include payment details in it, but only allow specific individuals access to that information

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in a protected manner. Those individuals are the ones who you trust to make necessary purchases,

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remain within a predetermined budget, and organize invoices and receipts.

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They may also be someone who must make regular purchases, so giving them access

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cuts down on the times they come up to you and sheepishly ask for the company card. For example,

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someone in your company may be responsible for ordering supplies, like pens, printer ink,

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or branded merchandise for employees. Someone in our office designs items for clients,

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like stuffed animals—BerniePortal users ask for them every year, so it’s a valid expense!

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Interested in getting some fun BerniePortal swag like Barry here? Join our HR Party of One

Join the HR Party of One Community

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Community, linked in the description, and post a question or topic that you

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want other HR professionals to share their perspectives on. Include #HRPO1 so we know

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you came from this episode. A winner will be selected on September 26th, 2024, which

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is National Human Resources Professionals Day. Remember—your role is as strategic as you make it!

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That’s it for this episode! Subscribe to our channel and ring the bell to

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get notifications about our newest episodes,

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which are released every Tuesday and Thursday! As always, thanks for watching.