Top 5 Lessons for Building Secure AP Processes
As a founder, you juggle countless demands, and one financial misstep has the potential to derail everything you've built. You know firsthand that effectively managing accounts payable (AP) can make or break a business — especially for consumer packaged goods (CPG) brands. The cashflow complexities that often arise can raise the stakes even higher, with even thriving brands closing their doors due to cash mismanagement. These stories serve as a sobering reminder of why secure AP processes matter for your CPG business and brand.
I understand that running a company can sometimes feel like flying a plane without understanding the controls, and that's why building a secure AP system helps you stay firmly on your flight path. The right accounting system, such as the one offered by Bill.com, helps you better control cash outflows, prevent fraud, and ensure your business stays financially sound for the long term.
In this article, I draw on over 10 years of experience dealing with complex financial operations, including in my former role as Controller at Iron Horse Vineyards, to help you build AP internal controls that work to protect your hard-earned money.
1. Use Dual Controls for Payment Authorization
I've witnessed firsthand how accounts payable best practices like dual controls can prevent internal and external fraud. Secure AP processes like this protect your cash and boost your confidence in your company's financial integrity. Requiring multiple approvals before remitting payments ensures no single person can unilaterally authorize cash outflows from your business. For founders like you, this practice offers peace of mind because you know you have the final say on how and when funds get spent.
Think of dual controls as a financial checkpoint system. I've seen founders who don't use this system get tough wake-up calls. From bills getting paid too early and vendors receiving double payments to money disappearing due to authorized activity, I've heard all the horror stories and want to stress the importance of putting two sets of eyes on every payment your CPG business makes. These systems prevent fraud while fostering trust and clarity among your team, smoothing internal tensions within your company.
How Bill.com Helps
Using Bill.com's dual control features simplifies enforcing safeguards on AP internal controls like cash outflows and strengthens your internal controls. The platform requires the founder (or their representative) and the accounting team to approve payments. This strict policy enhances founder oversight and eliminates risks of unapproved transactions, fostering trust and confidence in your CPG brand's AP process.
2. Maintain a Clear Audit Trail
Have you ever needed to track down who approved a payment or when a bill got submitted? I have, and without a clear-cut audit trail, these questions often lead to frustration and wasted time. Centralized records solve this problem, including systems that log every action your staff takes on invoices, approvals, and payments. These systems let you look back to see who approved a vendor bill so you can find the information you need in seconds, all without digging through email threads or filing cabinets.
Maintaining clear audit trails does more than save time, though. They also ensure compliance with financial regulations and provide transparency during audits. I've used platforms like Bill.com to create audit trails in my time at BBG, and they quickly resolve questions about payment histories and team responsibilities, not to mention inquiries about accounts receivable (AR). For founders, this level of visibility provides assurance that every dollar spent follows a verifiable path.
How Bill.com Helps
Bill.com's automated tracking system records every action in the AP process — from receipt of an invoice to approval of the payment. These records include time stamps, user activity, and detailed histories, simplifying the review process and verifying past actions. Because the platform centralizes this vital information, it eliminates the hassle of searching through scattered emails and documents, saving your staff time and your business money.
3. Centralize Vendor Management to Prevent Fraud
Vendor management often feels like an afterthought, but scattered vendor records create opportunities for errors and fraud. In fact, fraud often originates from disorganized or incomplete vendor records. This can include duplicate invoices, payments to fake vendors, and outdated contract details — all of which put your CPG brand at risk. That's why centralizing vendor management changes the game.
Centralizing vendor management helps companies reduce risks of fraudulent activity and ensures vendor information stays accurate and secure. Creating a central repository to store and validate vendor information minimizes errors, eliminates unauthorized changes, and makes it easier to update vendor records. By providing transparency in payment histories, centralization helps you spot red flags early and prevent suspicious transactions from occurring in the first place.
How Bill.com Helps
Bill.com lets businesses store vendor details in a secure location and integrates accounting tools for consistency in their financial data — and yours. It also validates information, tracks payment histories, and flags discrepancies, putting everything you need centralized and highly visible in one location. Built-in alerts on the platform detect duplicate invoices and suspicious activities for extra protection against fraud and mismanagement.
4. Implement Multi-Level Approval Workflows
In CPG where large payments for inventory precede customer payments, using tiered systems for approvals distributes responsibility for cash outflows. To put it frankly, complex businesses need structured controls to manage their payments cohesively. Without approval workflows, a single oversight might cost your company thousands of dollars.
Multi-level approvals solve this problem by requiring checks at every stage. Requiring multiple people to sign off on complex transactions ensures critical payments receive appropriate scrutiny. This multi-level approach to approval workflows ensures no single payment can occur without proper oversight and accountability, enhancing transparency and accountability while preventing unauthorized transactions.
How Bill.com Helps
Bill.com lets you set up tiered approval levels based on factors like invoice amounts, with small expenses approved by department heads and large expenditures approved by founders. You can also create vendor-specific approvals for high-risk categories that depend on vendor reputation and set departmental budgets on spending that requires cross-departmental sign-offs. These workflows can scale with your business as it grows, providing proper oversight for every transaction.
5. Automate Invoice Processing to Minimize Errors
Manual AP processes slow you down and increase the risk of costly mistakes. Lost invoices, data entry errors, and missed payments disrupt your operations and hamper your cash flow. Automating your processes with a platform like Bill.com nixes these problems while improving your accuracy and efficiency of workflows.
Automating AP processes reduces risks of errors by eliminating manual data entry for more consistency and reliability in accounting. Fast-paced CPG environments mean teams need valuable time for operational tasks, making automation a must for streamlining invoice capture, approval routing, and payment scheduling.
How Bill.com Helps
Features like automatic invoice scanning, digital workflows, and scheduled payments enable Bill.com to minimize human error and keep AP processes flowing smoothly. This automation also schedules payments and creates an audit trail, making it much easier for your accounting staff to track and verify payments. Speeding up processing times improves your overall reliability when you use Bill.com for automating your AP processes.
Optimizing Your AP Processes for Security and Efficiency
Secure AP processes protect your CPG business's finances and strengthen the foundation of your company. Dual controls, clear audit trails, centralized vendor management, multi-level approvals, and automation safeguard your accounting processes. The added peace of mind and confidence gained from these lessons let you focus more energy on growth and less on cash leaks and fraud.
At BBG, we understand the challenges of managing cash in a CPG business. Inventory purchases, delayed customer payments, and tight margins can make your brand vulnerable. The right AP processes, however, give you back control of your finances. Tools like Bill.com simplify implementing these accounts payable best practices for a straightforward approach to your business's future.
Don't wait until cash flow issues or internal mistakes arise — BBG can assist you in building secure AP processes tailored to CPG founders like you. Look at your current AP workflows to see how you're doing, and then contact us at BBG to see how we can help you improve your existing systems. Our expert advice provides added confidence in every payment your company makes.
Author: Eileen Vasko
Eileen Vasko is an accomplished Accounting professional with over 10 years of experience in financial management, cost accounting, and compliance. As a former Controller at Iron Horse Vineyards, she excelled at managing complex financial operations, including inventory cost accounting. As the Accountant Manager Team Lead at BBG, Eileen specializes in building highly efficient accounting processes including accounts payable/receivable, payroll, and tax reporting. Eileen is highly skilled in using advanced accounting platforms and tools to drive efficient processes.
