May 1999 Issue


Gunn Partners, Inc., recently released the results of a study on the accounts payable practices of 57 companies. The study identifies practices that companies can employ to improve accounts payable functions and save company dollars.

Walter Hazleton of Gunn Partners sees opportunities for savings by moving from paper to electronic processing. The study included the following recommendations:

* Greater use of electronic data interchange (EDI) for purchase orders. Some companies have achieved 99% EDI levels by refusing to accept paper invoices. Vendors without EDI capability can outsource hard copy to an EDI service company;

* Greater use of purchasing cards. About 20% of the companies studied by Gunn Partners used purchasing cards for as much as half of their noninventory transactions; and

* Increased use of evaluate receipts settlement, payment on receipt, or payment on production practices. All three eliminate the actual invoice. With the first two methods, the purchase order is stored in the computer and payment is made automatically after goods are received and verified. With payment on production, companies do not need receiving dock acknowledgement of receipt. Payment is made when the product using the materials is manufactured. For example, at Saturn, a bill of material that lists everything that went into the car goes into the computer every time a car comes off the line. The vendors are then paid, without any need to match invoices, purchase orders, and the like.

For more information on the study contact Gunn Partners, Inc., at (617) 747-5090,, or *

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