Happy New Year! This is the time of year when we evaluate our shortcomings and strive to improve. While this practice is usually associated with our personal lives, there is no reason why you can't apply it to working in accounts payable. AP organizations should always be looking for ways to work more efficiently and inexpensively.

Following is a list of 50 cost-saving ideas and best AP practices your organization can start taking right now to streamline processes and lower costs. Each idea or practice is explored further in an article available to members of The Accounts Payable Network. (Benefits of Membership). Check out the entire list, and find something you can start implementing today.

1) Use e-Invoices to Reduce Over-billings. A large grocery supplier for Gate Petroleum routinely billed for more items than were delivered. Gate implemented e-invoicing, which allowed the supplier to create invoices after the truck was loaded (allowing precise product counts) and send them electronically.

2) Implement Dynamic Discounting. These are discounts that can be offered by suppliers or buyers electronically. Dynamic discounts are typically on a sliding scale, with the discount amount lowering each day the invoice isn't paid.

3) Save Time with Automated Workflow. Karen Apps with Gate Petroleum says that workflow allowed her team to reduce the time it takes to approve an invoice from more than two weeks to less than one.

4) Centralize, then automate. Centralizing your operation into a shared services center should lower costs initially. Eventual wage inflation will erase those benefits, but once centralized, the next step is to automate payables, achieving long term savings.

5) Implement Invoice Imaging. Scan invoices on the front end and then destroy the original paper invoice. Unlike e-invoicing, imaging doesn't require involvement from your vendors.

6) Adopt e-Payment. The average cost of processing an ACH disbursement is $1.38, according to TAPN benchmark data. In contrast, the cost of processing a check is $5.14.

7) Store Documents Electronically. Implementing an electronic recordkeeping solution allows you to store documents indefinitely without paying rent for large, offsite storage areas.

8) Get Vendors to Accept Electronic Payment. Tips to get your vendors to accept electronic payments:

• Create a "preferred vendors" list of high-volume vendors and require them to accept ACH or BIP via cards
• Send no-obligation letters to vendors explaining the benefits of accepting electronic payments
• Large buyers can simply mandate EFT as a requirement of doing business

9) Implement a p-card program. A standard p-card program can reduce processing costs by removing 80 percent of your incoming invoices. For most organizations, 80 percent of their invoices are under $2,000.

10) Leverage e-Payment to Extend Terms. Jamie Dunphy, AP Manager for Goodyear Tire and Rubber Company, offers e-payment for vendors that accept extended payment terms. Vendors benefit by having a guaranteed day to receive payment.

11) Look for uncollected credits. A slowdown is business is a great time to look for credits. According to TAPN consultant Judy Bicking, many organizations have uncollected credit memos and cash advances.

12) Pay Freight Charges Directly to the Carrier. Judy Bicking says many carriers inflate freight charges to earn a profit. She recommends checking for vendors that charge freight on their invoices and informing them you wish to pay the carrier directly.

13) Avoid Rush Checks. Only pay by rush check when there is no alternative. Instead, publish check run dates and use p-cards for emergencies.

14) Optimize Check Run Frequency. Although check runs can be time-consuming, frequent check runs can prevent rush checks. Your optimal frequency is based on your organization's size.

15) Send Invoices Directly to AP. Invoices should be sent to AP, not the individual business units. This ensures timely processing. If using paper, send invoice copies to approvers; keep originals in AP.

16) Consider Optical Character Recognition. Translating scanned invoice data via OCR reduces data entry costs, as employees are not manually keying. The U.S. Department of Veteran's Affairs replaced several employees who manually keyed invoices with a smaller group responsible for verifying OCR results.

17) Get IWR. An Interactive Web Response system allows vendors to access invoice payment status via the web without having to call AP. Vendors easily can find invoice receipt and payment information themselves, saving AP time.

18)… or IVR. Similarly an Interactive Voice Response system can receive vendor calls automatically, accessing your company's database to answer the caller's question, reducing the number of calls that require AP interaction.

19) Use Direct Deposit for T&E. Direct Deposit for T&E expenses is cheaper than cutting checks, and employees receive their reimbursements faster.

20) Use Laser Checks. Laser checks require only a single check stock, as opposed to a separate pre-printed stock for each business entity. The cost of the check and labor needed to load it are reduced.

21) Reduce staff requirements with e-Invoicing. Implementing e-invoicing allowed Mohawk Industries to gradually eliminate 26 AP positions. "Whenever an employee would leave or put in their notice for one reason or another, we wouldn't replace them," AP Manager Tracy Bryant says.

22) Capture Early Payment Discounts. The most common discount offered, 2/10 net 30, represents a 36 percent APR discount for paying invoices in ten days instead of 30.

23) Enlist Sourcing. Getting vendors to send electronic invoices and offer discounts starts with sourcing. Work with procurement to promote both initiatives with suppliers when building the contract. When AP and purchasing communicate together, vendors know what the organization expects.

24) Start Tracking Metrics. Metrics give you a clear view of your as-is processes and help you identify expensive, redundant tasks. For example, by tracking overtime costs, you can identify the root causes of overtime and address them.

25) Have a 'Metrics Room.' A metrics room, sometimes called a green room, is an office space posting clearly what metrics are being tracked and the current measurements. Posting measurements encourages employees to improve productivity.

26) Adopt P-card Settlement. Paying AP invoices with purchasing cards allowed Huntsville, Ala.-based Teledyne to receive a rebate large enough to cover the salaries of its entire AP department. Teledyne pays $15 million annually with p-card.

27) Employ Activity-based Management. This cost-saving tool involves analyzing processes based on what functions they support and not just cost. This allows organizations to identify redundancies and lower costs.

28) Do not Mandate POs for All Purchases. Instead, use a mixture of POs, recurring payments and p-cards.

29) Use Blanket Purchase Orders. Blanket POs are short term contracts that lock in product specifications and price for a certain time period. Blanket purchase orders are best used for finite, recurring payments like lease agreements and contract labor.

30) Outsource Disbursement Processing. Sprint-Nextel contracts out disbursement processing, which AP Manager Michelle Trill says saves the company 25 percent compared to doing the work in house.

31) Apply Fraud Detection Software. Software solutions look for duplicate vendors in the master file and identify potentially fraudulent payments before they are paid, which can add up to significant savings.

32) Prevent Fraudulent Billing Schemes. Separate vendor setup, invoice approval, payment, and reconciliation duties to prevent fraudulent billing schemes. Also, look for increased unit prices made without the purchasing department's approval.

33) Prevent Check Tampering. Keep checks stored in a secure location; keep an eye out for missing voided checks, and separate check printing, signing, delivery, and reconciliation duties. Reconcile numbered checks with check number sequence.

34) Prevent Expense Reimbursement Fraud. Make sure expense reports are uniform and include information such as date, purpose, location, and amount of expense. Require documentation for all reimbursements.

35) Prevent ACH Fraud. Avoid potential losses:

• Set up separate accounts for checks and ACH payments
• Put an ACH debit block on your non-ACH accounts; authorized debits should occur in only one or very few accounts; likewise place a post-no-checks restriction on ACH accounts
• Use ACH credits and avoid ACH debits-you want to push the payment out, thus retaining more control, rather than allow someone else to pull the payment out. ACH credits have the lowest incidence of fraud according to a survey by the Association of Finance Professionals
• Reconcile accounts daily (businesses have only 24 hours to return unauthorized ACH entries, according to Wells Fargo)
• Test a new ACH credit payment by sending a dollar and confirming receipt by the bank, not the individual at the vendor that provided you the vendor's account number

36) Use Positive Pay. This is the single best practice for fighting check fraud. When checks are printed, an electronic file listing all the pertinent data-check number, amount, payee, date, etc., is created and transmitted to the bank, which compares every check presented with the list.

37)… or Reverse Positive Pay. Before cashing a check, the bank transmits a file to AP listing the information on the check presented for payment. AP then verifies the information with their own listing of outstanding checks.

38) Consider Evaluated Receipt Settlement. For manufacturing and certain other industries, ERS eliminates much of the manual invoice approval process, reduces handling errors, and ensures faster payments, which means better price negotiations and more captured discounts. Chere Rinehart, Director of AP for Starbucks Coffee Company leveraged ERS to reduce headcount.

39) Motivate and retain employees. Motivation helps reduce costly turnover. The following are inexpensive ways to keep employees motivated:

• Engage with employees and assure them that they can come to you with any questions and concerns
• Clearly communicate daily, weekly, and monthly goals to your staff. They need direction
• Monthly AP meetings (perhaps breakfast) that allow staff to voice opinions and concerns
• Hold fun events like random drawings, ice cream sundae days, and birthday parties

40) Say "Thank You." According to a study by Accountemps, a staffing agency, employee recognition is the most effective employee motivator (more so than flexible work schedules and vacation time).

41) Train AP Staff and Internal Customers. Well-structured AP training programs can boost productivity by a minimum of 15 percent. Programs should include basic training for the AP staff and interdepartmental training to help other departments work with AP.

42) Analyze Your Spend. Analyze actual spend data – only AP has it – and provide it to the purchasing department; it identifies opportunities for consolidation and provides purchasing with leverage in negotiations with vendors for cost savings.

43) Train Staff in Negotiation. Training an employee on vendor negotiation may cost $400, but will pay for itself when he/she negotiates a 10 or 15 percent discount with a supplier.

44) Initiate a Continuous Improvement Culture. According to Hackett research, 81 percent of organizations with continuous improvement cultures (six sigma, kaizen) reduce operational costs by 20 percent when switching to shared services.

45) Follow T&E Expense Reimbursement Best Practices

• Eliminate cash advances; reimburse post-expenditure instead
• Determine the appropriate dollar level for requiring receipts in your organization. The IRS requirement is $75
• Use an electronic T&E reporting system if possible – these typically allow built-in policy controls, ease of use and timely reporting (with pre-population of credit card data into reports), simplified auditing and they facilitate timely reimbursement. The median cost savings from T&E automation is 50 percent

46) Use a Check Signing Machine. Inexpensive alternative if you do not want the controller – or other individual – to sign every check. These machines can be password protected (requiring two passwords in combination); keep track of the number of signatures. There is also no need to keep a signature stamp.

47) Secure Your Check Stock:

• Use security features on your check stock, such as watermarks and void pantographs and more
• Include stale date (e.g., void after 90 days...) on the check
• Use prismatic color printing on the face of the check, which makes it very hard for someone to forge the color scheme of your check stock
• Use laser lock printing paper so that once it's imprinted someone cannot remove the ink with tape and tamper with the names or values on the printed check
• Consider dual signatures for amounts over a certain dollar value
• Manager (at appropriate level) should review all signed checks, with the check log documentation. This allows the manager to spot check the information in the log

48) Mail Checks Directly to Vendors. Do not send checks to the business units for them to send to vendors. Make sure there is wording in your policy mandating that AP sends checks directly to vendors, in order to reduce fraud potential.

49) Use the IRS TIN Matching Program. Take advantage of IRS TIN matching to identify TIN mismatches early, which gives you time to get the correct information from the vendor and reduce B-notices.

50) Consider Post Audits. Audit recovery firms, working on a contingency basis, can analyze 6 months to a year's worth of payment records looking for errors and overpayments, then work with vendors to collect the money.