15 Best Examples of Accounts Payable Goals and Objectives

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SMART Performance Goals For Accounts Payable To Achieve Five Objectives

With nearly 30 years of finance and accounting expertise, I’m excited to share my recommendations for accounts payable goals and objectives.

This comprehensive list will help you accelerate progress, whether you aim to optimize an existing accounts payable (AP) operation, launch a new one, or prepare for a performance review.

I’ll cover aligning your goals to department objectives and crafting SMART goals for accounts payable to maximize performance.

Accounts payable management significantly impacts cash flow, vendor relationships, and more. So, let’s dive into these actionable examples that will allow your accounts payable team to work smarter and drive value for your organization.

Accounts Payable Goals Examples

My recommended performance goals for accounts payable include the following:

  • Audit and map the procure-to-pay process
  • Pay on time
  • Increase discounts captured
  • Reduce late payment penalties
  • Provide input for cash forecasting
  • Maintain supplier contact information
  • Enhance vendor relationships
  • Reconcile trial balance to the general ledger
  • Enhance internal controls
  • Ensure proper segregation of duties
  • Automate & streamline processes
  • Prepare and present relevant performance metrics
  • Report regularly to financial management
  • Attract, hire, retain, and train staff
  • Develop accounts payable policies and procedures

Now let’s examine each of these accounts payable goals in more detail. Doing so will provide context behind my recommended goals to help you understand their importance.

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Disclosure: At no cost to you, I may get commissions for purchases made through links in this post.

1. Audit And Map The Procure-To-Pay Process

Conduct a comprehensive audit and map your organization’s current procure-to-pay process from beginning to end.

Doing so will allow you to identify opportunities for improvement, including visibility into bottlenecks, redundancies, and process gaps. Your assessment lays the foundation for achieving many other accounts payable goals.

2. Pay On Time

Set an accounts payable goal to make vendor payments on time. However, paying on time may mean different things to different companies.

I recommend paying within the terms you and your suppliers have agreed to. However, some companies must make payments several days late to conserve cash.

3. Increase Discounts Captured

I recommend paying early when your suppliers offer discounts for doing so. Early payment discounts are an excellent way to reduce costs.

4. Reduce Late Payment Penalties

Set a goal to reduce late payment fees. Track and quantify late fees over time. Break the reason for late payment down by root cause. Identify solutions and implement them.

5. Provide Input for Cash Forecasting

Outflows for accounts payable are one of the most significant uses of cash for many companies. As a result, assist the finance function in forecasting company cash flows by providing projections of money needed to pay suppliers by day, week, and month.

6. Maintain Supplier Contact Information

Ensure all vendor contact information is:

  • Captured and accurately maintained
  • Backed up in the event of a disaster
  • Safeguarded for privacy

7. Enhance Vendor Relationships

Make vendor relationship management one of your explicit accounts payable goals.

Strong vendor relationships lead to better contract terms, higher quality products and services, and a greater willingness to partner.

Stronger partnerships with suppliers benefit not only accounts payable but procurement and the entire organization.

8. Reconcile Trial Balance To The General Ledger

The accounts payable trial balance must reconcile to the general ledger monthly.

Identify and resolve differences before the next month-end closing cycle. The accuracy and credibility of your company’s financial statements depends on it.

Read more: Best Goals for Accounting Professionals

9. Enhance Internal Controls

Look for opportunities to improve internal accounting controls over the accounts payable function. Here are several requirements to put in place:

  • Proper purchase order (PO) approval
  • Invoice approval
  • 3-way match of receiving report, PO, and invoice
  • Physically secure blank checks
  • Require dual check signatures

Read more: Best Performance Goals for Internal Auditors

10. Ensure Proper Segregation Of Duties

Adequate internal accounting controls call for proper segregation of duties. Thus, ensure different team members perform designated activities within the procure-to-pay process.

For example, strive to separate the following duties:

1. Vendor selection from master file setup

2. Purchase order preparation from purchase approval

3. Recording and processing transactions from check signing

4. Access to general ledger and bank reconciliations from other activities

Furthermore, make sufficient management supervision of accounts payable available for small departments where segregation best practices are impossible.

11. Automate & Streamline Processes

Use your process map created in goal #1 to identify areas to automate with technology, streamline, and eliminate unnecessary activities.

Read more: Goals for the accounts receivable function

12. Prepare And Present Relevant Performance Metrics

Identify and track key performance indicators (KPIs) for the accounts payable function. Several suggestions for accounts payable KPIs include:

  • Invoice processing time
  • On-time payment rate
  • Purchase discounts earned
  • Late penalties incurred
  • Cost per invoice processed
  • Number of invoices processed
  • Days payables outstanding (DPO)

Read more: SMART goals every business analyst should have

13. Report Regularly To Financial Management

Report your KPIs and other relevant information to procurement, controllership, and finance management. Demonstrate your leadership value to the company.

14. Attract, Hire, Retain, And Train Staff

The effectiveness and efficiency of the accounts payable function depends on your team member’s abilities, skills, and productivity.

Thus, hire the right people. Put those people in the proper organizational structure. Then train them, treat them well, and help them develop their careers.

Read more: How to develop professional team members

15. Develop (Or Update) Accounts Payable Policy And Procedure Documents

Comprehensive accounts payable policies and procedures are crucial for providing standardized guidelines and expectations for the team.

Well-defined and documented policies will:

  • Reduce errors
  • Improve efficiency
  • Decrease risk
  • Enable training of new personnel

Okay. That’s today’s 15 accounts payable goals examples.

Next, I will provide accounts payable objectives every AP department should have and explain how to align your goals with these objectives.

Most importantly, discussing the relationships between goals and department objectives with your manager can make a positive impression during your performance review.

Read more: Best goals for managers to have now

Objectives Of The Accounts Payable Function

Here are the five primary objectives every AP department should have:

  1. Satisfy supplier payment obligations
  2. Operate efficiently
  3. Maintain timely and accurate records
  4. Safeguard company cash
  5. Collaborate effectively across the organization

Next, I will align today’s AP department goals with these accounts payable objectives.

Accounts Payable Goals That Align With Satisfying Supplier Payment Obligations

A critical accounts payable objective is accurately satisfying supplier payment obligations on time.

To do so, focus on these goals:

  • Pay on time
  • Increase discounts captured
  • Reduce late payment penalties
  • Enhance vendor relationships

A/P Goals That Align With Operating Efficiently Objective

Operating accounts payable efficiently involves utilizing process automation, data analysis, and best practices to increase productivity.

To operate efficiently, focus on these goals:

  • Audit and map the procure-to-pay process
  • Automate & streamline processes
  • Prepare and present relevant performance metrics
  • Develop accounts payable policies and procedures

Payables Goals That Align With Maintaining Timely And Accurate Records Objective

Maintaining up-to-date and accurate accounts payable records is crucial for proper financial accounting, compliance, timely payment, and decision-making.

To maintain accurate and timely records, focus on these goals:

  • Maintain supplier master file information
  • Reconcile trial balance to the general ledger

AP Goals That Align With Safeguarding Company Cash Objective

Safeguarding company cash involves implementing financial controls and procedures to prevent fraud, ensure legitimate payments, and protect money from misuse, abuse, or theft.

To safeguard company cash, focus on these goals:

  • Enhance internal controls
  • Ensure proper segregation of duties

Trade Payables Goals That Align With Collaborating Effectively Across The Organization Objective

A core accounts payable objective is coordinating with all departments, like operations, procurement, and sales, to align activities, improve processes, and provide excellent service.

Focus on these accounts payable goals examples to collaborate effectively:

  • Prepare and present relevant performance metrics
  • Report regularly to cross-functional management
  • Attract, hire, retain, and train staff

Note that the last point about high-performing staff applies to all goals and objectives for accounts payable. Good people are a must to achieve positive results.

Finally, use a proven goal-setting system for your accounts payable goals. I recommend setting SMART goals for accounts payable.

SMART Goals For Accounts Payable Department

To set SMART goals for accounts payable, write them down. As you document, make sure each of your goals meets the following criteria:

Specific. Be as detailed as possible about exactly what you want to achieve. Thus, make well-defined, clear, and unambiguous goals.

Measurable. Determine how you will measure progress and completion of each goal. Identify the metrics to track progress and quantify achievement.

Achievable. Choose and set challenging goals. However, save time by making only possible plans. Make sure to take into account available resources, capabilities, and obstacles.

Relevant. Each goal should be relevant to your current role, the accounts payable function, and the company.

Time-bound. Every accounts payable goal you set should have a deadline for review and completion. Long-term goals should have interim milestones.

Okay. That’s all for today. Next, to wrap up, I have some final thoughts.

Accounts Payable Goals And Objectives Examples: Wrap Up

First, accounts payable are a critical part of the procurement-to-payment process. Furthermore, paying bills when due is essential for maintaining the viability of your company and enhancing vendor relationships.

So, satisfy the objectives of accounts payable by setting and achieving the proper goals.

Good luck making your accounts payable department the best it can be.

If you are hungry for more business goal-setting advice, check out my entire archive of articles.

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Author Bio: Tom Scott founded the consulting and coaching firm Dividends Diversify, LLC. He leverages his expertise and decades of experience in goal setting, relocation assistance, and investing for long-term wealth to help clients reach their full potential.

SMART Performance Goals And Objectives For Accounts Payable Explained