Project Management Ideas Working Blog

How to Get Accounting Departments to Pay On Time

Whether you’re the client or the vendor, you want the money ready when deliverables are ready. A check should be on it’s way as soon as the work is tested/reviewed, verified and signed-off. But that’s not what happens. Instead the work gets done and then everyone has to wait for accounting to put the check through. There are good reasons why bills aren’t paid on time, but mostly it’s about paperwork.

It’s Usually a Paperwork Problem

You’ll find payment issues are often administrative issues: An invoice doesn’t hit the right period; a PO number is written incorrectly; a change order doesn’t get signed; or the request doesn’t make it in time for the batch.

Anyone who has navigated a government office or an HR department can tell you that getting something done requires following a very specific choreography of forms, conversations and deadlines. Getting money from companies is the same.

How to Reduce Late Payouts

Both clients and vendors are responsible for getting payouts done on time. Do the following to make sure you get paid out (or make payments) on time:

Before Project Start
  • Vendors: Identify who has the real authority for getting payment made. Its not necessarily the manager that you’re working with.
  • Client: Let the accounting department know the work terms (cost, duration, payment terms)
  • Both: Ask for all documents that will need to filled out: vendor records, contracts, NDAs, background checks, tax forms. Make a checklist of all the documentation and assign someone to make sure it’s all in.
  • Both: Deliver all the forms and then check (3-5 days later) that everything is in order and good
  • Client: If the project is broken down into separate POs or disbursements, then try to get all POs setup in advance. If you can’t, then add getting subsequent POs requested as a recurring project task.
  • Vendor: Share estimated finish dates for phase completions and/or deliverables, so people have a rough idea of when money needs to be available.
  • Vendor: Don’t start working until you have confirmation that the vendor records are in the system, the accounts for payment are reserved, and the authorization for the phase or project is in place.
Prior to Payout Points
  • Vendor: Team review the deliverable or phase requirements to make sure they are in order.
  • Vendor: Send an FYI email to the team, client and anyone else involved.
    You want them to know that you’ll soon be sending deliverables for approval (the earlier you do this better).
  • Give an updated completion date to stakeholders.
  • Vendor: If you are comfortable with your delivery date, then put together your invoice well in advance. You may still have expenses to add, but you should know the sum of the contracted work and approved change orders.
  • Client: Start the check cutting process when the delivery is made: client’s should submit the paperwork or send the email; vendors should ask the client to confirm payment will be available.
After Each Payout
  • Both: Make sure there is a receipt for each payment.
  • Both: Create and send out a payment summary that shows payouts to date, remaining budget and projected future payouts.
  • Both: Reconcile the books: clients should make sure that the accounts are balanced; vendors should do the same on their side.

A/P Won’t Feel Your Pain

With the administrative stuff, you’ll find that accounting departments are sympathetic on the phone but completely inflexible in practice. They have policies and requirements that you have not satisfied, so you have to wait. It’s that simple.

You might get your checks expedited if a project sponsor or a key stakeholder has the power to ignore the policies, but usually you’re stuck waiting another 2, 4 or 6 weeks. Often you’ll end up waiting until the next disbursement on the project.

It’s better to avoid payment issues by keeping everyone informed, handling paperwork properly the first time, and documenting what’s paid and what’s owed at every stage.

Featured image from GoodFellas via Life Daily