The Accounts Payable (A/P) process for a SNF need not be cumbersome or overwhelming.

Technology has made it possible for most of the A/P process to become routinized and electronic. However, it does require human oversight and management.

Establishing Accounts Payable Procedures

Just like at home, you need a plan to make sure that all bills get paid…on time. Establish A/P procedures in place for everyone to follow. Try to identify one key individual to serve as the A/P contact with vendors. Ensure that this person’s contact information is made available to all vendors. Anytime there is a change in the A/P contact the vendors need to be made aware along with any change in the process. Cross-train at least one additional person as back up in the event that the key contact is not available.

Tracking Contracts with Vendors

Keep track of all contracts by placing scanned copies into electronic files.

To help organize the overall contract information and contacts, set up an Excel spreadsheet and your email address book with the contact information for each vendor. Entering vendors with the correct address and account number makes it easy to identify and verify for future reference. It is best practice that the individual entering invoices for payment be different than the individual responsible for making the payments. It provides a double check to help minimize any potential risk of employee theft and/or fraud.

Note the terms of the contract and use your Outlook calendar to send a reminder 3-6 months prior to a contract renewal. This provides for ample time to review the performance of the vendor and re-negotiate any new terms at that time. All contracts should be reviewed at least annually. For higher cost or higher volume contracts, consider a competitive bidding process or RFP. This ensures that you have completed the due diligence to secure the best product at the best price.

Ask for a loyalty discount from a vendor who wants to keep your business. Utilize opportunities via a group purchasing program either through your parent organization or a trade association. Determine the discounts and other benefits available to the participants. Negotiate all vendor contracts for the best payment terms possible. Take advantage of opportunities to receive discounts for early payments, timely payments, etc. No need to pay late fees and interest charges because invoices were not entered into the A/P system or paid per the terms of the contract or agreement.

Payments charged to a credit card may yield additional benefits from the card issuer such as a rebate. Some credit cards such as American Express offer discounts for the use of their card at preferred vendors, example: Fedex. Rebates of 2-5% are good too. Can vendors be set up in your system for automatic payments? Can payments be made through ACH to avoid the expense of preparing a check and mailing it? Save payment confirmations in the electronic file you set up in your system. Depending on the size of your organization, you might find a benefit in using the SAP system for A/P.

Put those terms into the contract in writing. Do not lock the facility into any long term obligation. It is rare to need a contract that will be in force for five years. That is primarily for purchase/lease of larger equipment items such as copiers. This practice is not typically necessary in today’s world.

If payment will be a problem in a given month, give the vendor a courtesy call and let them know when they can expect payment. If there is a larger problem, be up front and do what you can to negotiate additional terms.

The Difference Between an Invoice and a Statement

Be sure that all department heads and key personnel understand the difference between an invoice and a statement. You should enter and pay from an invoice, not from a statement, delivery ticket, purchase order, quote, or estimate unless discussed. This avoids duplicates and overpayments. When materials and goods are ordered, they should be tracked to a specific Purchase Order and/or Invoice #. Sequentially numbered invoices will help to ensure that duplicate invoices are not processed.

Deliveries of supplies come with an order form or some other documentation. That should be cross checked by the individual receiving the items to ensure that all items were received. If not, there should be a notation that an item will be on backorder or the charges will be taken off the invoice. Do not pay for items not received. Establish a system to track inventory. Bar coding is common for the medical supply area. But what about kitchen and dining services supplies, linens, office supplies? Don’t just put items out because they were delivered. Know your par level requirements and supply the departments as needed. More than one new manager has learned not to put out all the new linens at one time.

A/P Efficiency with Technology

Technology has helped to transform the A/P process from a paper and pencil system to one that uses technology to introduce more checks and balances, safeguards and efficiency to the process. The result is a system that requires much less time for management of the vendor relationships, contracts, invoices and payments. Saving time equates to reducing labor costs. Reducing labor costs in the A/P process is less painful than reducing labor costs in the care and services areas.

Need help with your A/P processes? Contact the experts at Richter Healthcare Consultants today!