Accounts Payable Processing?

Question

Why would the department, I send the invoices to, after I process them as OK to pay, take so long to pay the vendor? What is the trick or reason why/what I am not seeing from our check cutting department?

I work for a large international corporation. Many times I see invoices take 5-14 weeks, after I sent them as OK to pay, for the vendor to receive a check or a deposit. I know, or at least have been told, they sometimes simply forget or misplace the invoice(s). But what about so many other times? What is really happpening. Our people cannot be that incompetent!

Answer 1

It is primarily a process of controls, known as validation... in your case AP is matching your approved invoice and validating it with the work order issued to the vendor...which prevents a double payment for a single invoice.

Additionally many large scale companies process invoices in batches to simplify cheque reconciliations and cash management issues.

Answer 2

They are having financial problems, and are stalling for time because they don't actually have the money. I've seen insurance companies not pay claims for that reason. They would reject it or send the claim back for bogus reasons, to stall for time. One company did it to every claim I sent in. It generally bought them 5-6 more weeks.

Answer 3

Larger companies can have inefficiencies processing invoices, but they could be lacking cash and are waiting for funds to be received or they are unwilling to borrow for operating money.  Does not sound good.