| Available Internet Information for Supporting the Accounts Payable Function November 15, 2003 1. Introduction. The purpose of this article is to identify useful accounts payable Internet sites and describe information available at these sites. The sites were identified during extensive Internet searching, using many relevant accounts payable-related terms. Sites identified and described in this article are presented in the following activities, which are judged to be important to the accounts payable function: · Purchasing and Prices · Accounting, Processes, Procedures, and Policies · Payments · Internal Control and Auditing · Ratio Analysis and Company Performance Measurements Approximately 55 sites, evaluated to have potentially useful accounts-payable information, are identified in this article. The above activities were selected because Internet sites were found that provide useful information on the activity. If other accounts payable activities are not included, no Internet sites were found. Specialized company payment functions such as payroll, debt, taxes, and dividends were not included in the research for this article. Hopefully, the sites provided in this article can help support the accounts payable specialist and management accountant in their day-to-day work duties by serving as a quickly available source of useful information. The rest of the article identifies and describes these sites. 2. Purchasing and Prices. The accounts payable function might be viewed as beginning with the purchasing function. Although the purchasing function is often separated from accounts payable, it seems that such an important link exists between these two company functions that available Internet information related to purchasing, that can be quickly linked to and provides useful information, should be included in this article. Several sites provide such purchasing-related information as benchmarking data, processes and concepts, and best practices. The CAPS Research site, www.capsresearch.org, has benchmarking, best practices, and critical issues research reports, surveys, and studies on the purchasing function. Included are reports on Internet purchasing and auctioning. CAPS Research is a non-profit, independent research organization, co-sponsored by Arizona State University and the Institute for Supply Management. Registration, which is free, is required to use the site. The Institute for Supply Management's site, www.ism.ws, has several articles in its databases, which can be searched from the site. Unfortunately, some of the better articles require membership in the Institute for Supply Management to access. Searching on “accounts payable” yielded 252 hits. Good information is available without membership. SupplyChainBrain.com, Inc.’s site, www.supplychainbrain.com, can search more than 50 other websites that have supply chain management information. Internet purchasing is now well established and should become an increasingly important company procedure. Internet uses to support purchasing include: placing orders at vendor websites; what I call, competitive purchasing; and determining price data. When a company-vendor relationship is established through the Internet at purchase, it is sensible that payment and other accounts payable interactions with the vendor might also use the Internet. An Internet purchasing interaction between the company and the vendor could and should lead to a reduced separation of purchasing and accounts payable functions within a company. In other words, technology will help to blend functions. Although using the Internet can lead to such results as decreasing vendor order processing time and better management for order and receiving data, with good potential for cost reductions, placing purchase orders via the Internet is not, it seems to me, the revolutionary change that the Internet has to offer the purchasing function. The Internet just represents a more efficient way to do what has always been done, placing orders and managing data. It seems to me that the result is much different with respect to the Internet and its use in “competitive purchasing” and obtaining price information. I think the Internet is likely to offer new and growing important changes and benefits to companies in purchasing because of the effect the Internet will have on competitive purchasing and as a source of price information. A representation of some of what the Internet has to offer related to competitive purchasing and price data is presented in the rest of this purchasing and prices section. At the site, www.buyerzon.com, maintained by BuyerZone.com, Inc., companies submit a request for bids, which goes to vendors that have signed up with BuyerZone. Vendors are pre-qualified by BuyerZone, as well as purchasers (buyers). A request for bids and bidding in response to the request is not new. What is new is the data processing and speed power that computers and the Internet brings to the process. This power of data processing and interaction speed should greatly increase the likelihood of finding the lowest cost producers at any given point in time, on a new scale not previously known, with a real benefit to companies. BuyerZone makes money by receiving a fee from the vendor, accepted by the buyer. Also, an annual registration fee is charged. BuyerZone, and other operators of "request quotes and get bids" sites, play an important role by providing market place order and policing of buyer and vendor qualifications. At BuyerZone, products, mostly office, and services can be sought by buyers and bided on by suppliers. “Request quotes and get bids" sites apparently specialize in different types of products and services. The ways the site operators earn fees may also vary from site to site. A payment from buyer to seller usually goes through the site operator, as a means to insure that the site operator collects a fee. As in all cases of purchases discussed in this article, the buyer and vendor, alone, decide on whether to contract with one another, after being brought together by the Internet process. At portals.ebay.com/12576, Ebay operates a business and industrial materials and products auction site. This operation, and at similar sites, is different than the BuyerZone site procedure described above. Rather than a request for bids submitted by the buyer, with follow-up seller bids, at Ebay and similar sites, sellers place products, or services, on the site, and buyers bid up the price until a sale is reached. Ebay offers escrow services. Ebay generally earns fees from the seller, when an item is listed. Ebay also earns fees from other services offered related to the auction process. An auction at this site is similar to a traditional auction, except for the data processing and presentation power of computers and the Internet. It seems to me this difference greatly increases the scope, availability, and usefulness of auctions. With the computer and Internet, sufficient quality and security can be achieved in the auction process. Auctions on the Internet have a very good chance of representing a new and acceptable source of supplies, materials, and services, at reduced costs. The result could be that Internet auctions might soon represent substantial transaction amounts for business purchases. Sorcity.com, Inc. operates a reverse auction site at www.sorcity.com. Whereas at auctions sites, sellers post the products or services and buyers compete at higher and higher prices for the product or service, in reverse auctions, buyers post products or services desired. A seller then bids to meet the buyer’s request, and bids down from a pre-determined high price. There is no obligation by the buyer to accept either the high initial price or lower prices, until the price goes down to a pre-determined guaranteed acceptance price, known only to the buyer and the site operator. At this guaranteed acceptance price or a lower bid price, the buyer agrees to accept the bid, if the bidder meets the buyer's specifications and other requirements. In most of these competitor purchase sites, acceptance of the sales transaction depends on the normal buyer/seller agreement of terms, after a price is agreed upon. At the Sorcity site, bidders (or suppliers) are pre-qualified by the site operator, and are notified when a buyer posts a needed product or service. This process, it seems to me, with the use of the power of the computer and the Internet in data handling and processing, has great potential to bring buyers and sellers together for mutual benefit. At the reverse auction site, the buyer brings the auctioned item to the site, versus the seller bringing the auctioned item to regular auction sites. The Internet, because of its revolutionary ability to search extraordinary large amounts of data very quickly and retrieve relevant information, offers a new resource to gain access to price data for most, if not all, of what any company needs to purchase. With this new resource, companies should be able to make better decisions to benefit them in their purchasing. Presented in the following few paragraphs are just a small representation of Internet sites, and what the Internet has to offer in providing price information. The term price is used to represent the sales price to the provider of the material or service. The sales price to the seller, of course, is a cost to the buyer. click here to go to the next page |