Imagine that you are the manager for an operation that employs a part-time bookkeeper to help manage your accounts payable system. The division of duties is such that you are the final authority for bill payment authorization. The bookkeeper prepares payments checks for your final signature, at which point the checks are mailed by the bookkeeper.

Recently you have found that your operation failed to take advantage for some early invoice payment discounts that were substantial. In addition, your operation incurred some late charges penalties on other invoices that were not paid in a timely manner.

Outline a series of steps you and your bookkeeper can take to ensure that your operation optimizes its ability to take advantage of timely payment discounts and minimizes its chances of paying charges related to late invoice payments.

Use the steps to write a formal AP policy designed to address the takes you and the bookkeeper will each perform as you address this important issue.

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