Why does accounts payable need to know as much as they do? Majority of the answer is because AP holds the vendor payment details, but another aspect is that AP has a lot of internal customers. In any business, each department has a lot of internal customers, but none are so different, or control driven as treasury and accounting.
Accounting and Treasury are both part of AP’s wild monthly ride. These two departments take up most of AP’s time. Both departments do completely different things. Treasury is focused on cash forecasting, investment activity, and (depending on the company) bank reconciliations. Accounting’s focus is on the general ledger and accruing expenses to ensure accurate financials. I know not all Accountants or Treasurers may fit into this analogy, but the processes always seem to in my experience.
First, you have the amazingly particular accountant. They have very organized hair, not a spec of lint on their classic ensemble, and perfectly placed eyeglasses. Yes, they are eyeglasses, never call them glasses or shades or specs. Such street language! These individuals are always on their game. If something comes to them, they fix it. They are the librarians. To make an appointment to talk to an accountant you’ll need details on what you’ll be talking about and why it impacts accounting before a meeting will be accepted. To put the cherry on top, accountants know everything about anything that goes on with the financials, so they are an amazing source of knowledge.
Second, you have the inquisitive and quick-witted treasurer. They look like a million bucks from the waist up. A suit jacket with a splash of color is over what appears to be a wet suit. This individual is ready to hit the beach at any time. Their hair is intriguing, you wonder how one can look unkept and yet have the appearance of authority. These are the west coast salespeople, or at least the few I have met, I’m sure my own expertise is not extensive. This individual can talk to anyone in any scenario. The client wants to talk on the phone, over zoom, a park bench, or the waves, anywhere is perfect as long as the bank is open.
Third, you’ve got AP. As I alluded to in previous posts, I see this individual as one who fixes problems, like the librarian, but also must influence those around them, like the salesperson. The mix of these two creates an AP Manager who must navigate those who want to talk on a bench, with all the details in hand, and a joke ready to lighten the mood. Envision someone with a warn bag full to the brim with tricks of the trade, time tested and true.
So, a treasurer and accountant walk into a bar and give each other the side eye. The bartender, AP, is ready to serve.
First order: a vodka shot with spritzer on the side. The treasurer is looking for information on liabilities that the company may have. AP has historical information on payments and vendor information, but the treasurer is looking for future details for forecasting. How do we know the bank details are correct and that we won’t lose thousands of dollars to fraudulent bank account changes? How much money will the company need to pay next week’s liabilities, or the next three month’s liabilities?
Shots go down quick, and a few sips of the spritzer is all the treasurer has time for. With their questions answered- the suit jacket will be removed quickly to meet up with their buddy John in a canoe about a venture that may be a good investment for the company. A treasurer uses cash to make money for the company. Remember, cash laying around loses interest on potential investments, kind of like the treasurer loses interest in talking about the GL faster than the vodka can do its job. (ba dum, tshhhhh)
Second order: whiskey, neat. The accountant is looking for what happened last month, and why it was applied to the wrong GL. Keep in mind AP tries hard to keep the subledger details clean and up to date, but there are always a few that squeak through. Why was there an increase in expenses against supplies GL? It wasn’t budgeted. So, who approved the invoice? This drink is sipped and may last hours. Get ready for it. They’re going to dig deep into the cushions of the subledger so be ready to have the whiskey on hand for refills.
When the whiskey is gone, the questions are done. The accountant will have left a long list of action items for AP to do on a bar napkin, but they always leave a pretty good tip. They’ll be back in a bit if you have any questions. An accountant’s interest is in your accountability to their GL. (ba dum, tshhhh)
So, remember when a treasurer and accountant walk into a bar, both are going to have an interest in AP. Just be sure to serve up the right drink. With all the data that falls into the basin that is AP, the data is there for analysis for all internal customers! It’s up to the AP Manager to understand the numbers for their internal customers.
What is Accounts Payable? 