Accounts Payable (AP) is an important yet often overlooked career segment of the accounting field. Whether you are still studying or just beginning your career, this article is for you, especially if you are wondering whether accounts payable is the right path.
We will start by understanding the accounts payable role, including the responsibilities and expectations. We will then discuss the different career stages of accounts payable, how you can grow and climb the career ladder, and how it can open doors to other areas in accounting. The goal is to present you with all the facts, enabling you to make a better decision about pursuing a career in accounts payable.
Understanding Accounts Payable
In its simplest form, accounts payable involves managing outgoing payments – ensuring that bills and invoices from suppliers and service providers are paid accurately and on time.
However, the responsibilities extend far beyond that, especially for those advanced in their AP career. Here is a partial list of duties and expectations of the accounts payable function:
- Processing Invoices & Outgoing Payments: Ensure timely and accurate payment of invoices, as well as ad-hoc transactions.
- Reconciling Invoices and Statements: Regularly compare invoices with company records and resolve discrepancies.
- Managing Vendor Relationships: Ensure smooth and efficient communication with vendors and efficiently resolve any issues related to invoices.
- Maintaining Financial Records: Record timely and accurate journal entries to ensure compliance and accuracy in financial reporting.
In essence, accounts payable is not just about paying bills; it’s a complex function that requires analytical skills to solve discrepancies, attention-to-detail quality to avoid costly mistakes, and a solid understanding of accounting principles to ensure accurate financial records. It’s a department that impacts a company’s cash flow, financial reporting, and vendor relationships. Simply put, accounts payable is an utterly critical function of a business.
Starting your career in accounts payable offers a unique perspective on the financial operations of a business. It’s a role where you can develop skills that are transferable to many other areas of accounting and finance. From understanding financial statements to grasping the nuances of business financial management, accounts payable provides foundational knowledge that is invaluable for any aspiring accountant.
In the next section, we’ll explore the career stages in accounts payable, including the starting points, growth opportunities, and progression paths.
Accounts Payable Career Path
In this section, we’ll discuss the typical career stages of accounts payable, highlight typical job titles and salary ranges in the United States, and provide an overview of job duties.
- Roles: Accounts Payable Clerk, Accounts Payable Clerk II, Senior Accounts Payable Clerk/Specialist.
- Salary Range: $40,122 – $61,412 (Dec 2023)
- Job Duties: Include basic invoice processing, payment preparations, account reconciliations, booking journal entries, and handling more advanced invoice verifications at the senior clerk/specialist level.
At the entry-level, the role typically involves paying invoices and handling ad-hoc payment requests. Some clerks also perform reconciliation, identify and solve discrepancies, and record journal entries (such as the three-way match). These are the fundamentals of accounts payable; mastering them is necessary to climb the career ladder.
- Roles: Accounts Payable Supervisor, Accounts Payable Manager.
- Salary Range: $77,404 to $130,567 (Dec 2023)
- Job Duties: Include managing staff/clerks, reviewing/approving payments, overseeing the invoice process, and implementing AP strategies.
In the mid-level stage of an accounts payable career, the expectations shift towards leadership and strategic oversight. Professionals in this phase, such as Accounts Payable Supervisors or Managers, are expected to manage teams, review and approve the invoices/wires processed by the staff, and develop strategies that enhance the efficiency and accuracy of the AP function. In other words, there is a bigger load of responsibilities, which comes with higher compensation.
If you’re aiming to grow from a clerk or analyst position to a mid-level role in accounts payable, it’s important for you to show that you’re not just good with the day-to-day tasks. You need to prove that you’ve got a strong handle on all AP processes, that you can lead a team effectively, and that you can provide proper oversight of work performed by the entry-level staff.
- Roles: Accounts Payable Senior Manager, Accounts Payable Director.
- Salary Range: $62,000 to $164,000. (Dec 2023)
- Job Duties: Focus on departmental leadership, strategic management, high-level vendor negotiations, and comprehensive oversight of financial transactions
Reaching a senior-level position in accounts payable, like becoming a Senior Manager or Director, is about more than just being good at your job. It’s about leading the whole AP department and making decisions that align with your company’s larger financial goals. You are also responsible for pretty much everything your department touches. In return, you will get a relatively generous compensation package.
To get there, you will need years, if not decades, of experience. You will also need an in-depth understanding of financial management and the ability to work across various departments. Strengthening your leadership skills, networking with industry professionals, and staying updated with the latest trends in accounting can also play a crucial role in your journey to these high-level roles.
Is Accounts Payable a Good Career?
If the career ladder seems “doable,” and the compensation seems reasonable enough, let’s discuss whether a career in accounts payable suits you.
- Financial Stability: Accounts payable is often considered a ‘recession-proof‘ career. Regardless of the economic climate, businesses need to process payments, making AP roles consistently in demand.
- Career Flexibility: Accounts payable provides a gateway to other accounting areas such as treasury, accounts receivable, or general ledger. Suppose you get bored with processing payments one day. In that case, it’s relatively easy to transfer internally within the accounting department since the skill sets, familiarity with the ERP, and qualities are well needed elsewhere in accounting.
- Lower Educational Barrier: Compared to other accounting roles, accounts payable often demands less specialized education. You don’t need to memorize tons of journal entries or accounting rules. It’s a practical entry point for those still determining their interest in accounting or who haven’t fully committed to an accounting degree.
- Ceiling on Advancement: While accounts payable offers good career advancement, there is a ceiling at the senior manager/director level. While it might be good enough for some, it’s limiting for those with more ambitious goals, such as becoming a controller or CFO.
- Limited Exposure: Specializing in accounts payable might limit exposure to broader accounting or strategic financial planning areas. There is overlapping knowledge, but the more comprehensive accounting and finance roles often demand more skillsets and education/experience.
- Slower Career Growth: Compared to other areas in accounting or finance, career growth in accounts payable can be relatively slower, owing to the routine nature of the job. For example, an entry-level General Ledger (GL) accountant could advance to a mid-level managerial position in as little as five years. In contrast, climbing the ladder in accounts payable often takes more time, as the roles tend to involve less variety and fewer opportunities for rapid advancement.
In conclusion, a career in Accounts Payable (AP) offers excellent stability. Its recession-proof nature ensures a constant demand for professionals, while the lower educational requirements provide an accessible entry point into the accounting world.
However, it’s important to weigh the potential limitations, such as the ceiling on career advancement and the slower career growth compared to other accounting roles. Ultimately, if these trade-offs are manageable with your professional goals and aspirations, a career in accounts payable can be a rewarding and solid choice.
- Accounts payable is more than just handling payments; it involves managing financial records, reconciling invoices, and maintaining vendor relationships. This role requires analytical skills, attention to detail, and a foundational understanding of accounting principles. It’s a critical function influencing a company’s cash flow, financial reporting, and overall financial health.
- Starting with entry-level roles like Clerk or Specialist, the Accounts Payable career path offers a progression through mid-level roles such as Supervisor and Manager, and up to senior positions like Senior Manager or Director. Each stage brings new responsibilities, from basic invoice processing and reconciliations at the entry level to strategic oversight and departmental leadership in senior roles.
- Accounts payable offers financial stability and a lower educational barrier for entry, making it an attractive field for those starting in accounting. However, it also presents limitations, such as a lower career ceiling and slower career growth compared to other areas.