When it comes to processing bills through accounts payable, most Finance teams have a pretty solid set of procedures in place: invoice is received, is coded into a GL system (either automatically or manually), gets reviewed, gets paid, and then the payment is recorded in the GL system.
Decades ago, it would have been unheard of for bona fide business expenses to run through business – or even personal (gasp!) – credit cards. Now, however, not only is it accepted, but actually quite common, for a number of reasons.
First, many vendors just don’t have the cash flow to allow 30, 60 or 90-day payment terms for their customers. Credit cards allow for instant payment which is certainly preferable for them.
Also, many payments - most notably for software subscriptions - are monthly and recurring, making them ideally suited to be set up as automated credit card charges.
Finally, many small companies are no longer willing to accept the risk of bad debts. Payment in advance is required, and credit cards get this done easily and instantly.
However, because the use of credit cards to pay business expenses has been more of a slow creep versus a sudden change, many finance teams have not set up formal processes for dealing with these costs.
This is dangerous for a number of reasons:
Here are some easy steps you can implement today to ensure the expenses charged to your company credit cards are getting the same level of examination as your regular invoices.
STEP 1: Set up a new email group named email@example.com. This email group should be utilized in the exact same manner your team uses its AP@ email alias. Add the relevant finance team members to the group. Communicate (via email) to your teammates instructing them to use the firstname.lastname@example.org alias as the billing email when signing up for new vendor services. Below is an email template that you could leverage:
Subject: Billing email for when signing up new vendor services
In order to ensure all business-related credit card charges are being properly reviewed and categorized, the Finance team has set up the new email alias email@example.com. Please use this email as the billing email when signing up for vendors services. If you have vendor services where you originally signed up using your personal company email, please can you make this change with the vendor.
STEP 2: When you receive a receipt via the receipts@ inbox, review and scrutinize it to make sure the figures are accurate. Just because the payment has already been made, it doesn’t stop your team from verifying charges and amounts. This review will also ensure that your credit card charges are included in your spend analytics, as opposed to being lumped together.
STEP 3: To the extent you have questions on the charges, send an email to the person at your company who manages the relationship. A lot of spending surprises often occur with costs charged to credit cards. You can limit them by asking questions about the bills you review and proactively aligning on spend estimates for the future.
By ensuring your company’s credit card charges are properly folded into your overall bill review and approval processes, you will be sure that your spend analytics are complete and your vendor payments are accurate. By taking control of spend, your Finance team will be better able to embrace its role as a proactive and strategic contributor within the organization.
For information on Glean.ai, please contact firstname.lastname@example.org.