Most Companies Have Centralized AP

From: IOMA

The vast majority (80%) of Accounts Payable (AP) departments are organized as a centralized function, not part of a formal shared services center, according to IOMA's AP Compensation Report 2007. On an overall basis, only 9% of companies consider their AP departments as part of a bona fide shared services center.

There are still some holdovers from the old days of decentralization of corporate support services, as 8.4% report AP setups at the divisional level. Of course, there can be a valid need for this type of arrangement. For instance, the highly specialized operations of a particular area may need its own AP function to sort out complex issues that arise in invoice reconciliation and payment.

The overall trends the data suggest are:

• the smaller the company, the more likely it is to have a centralized function;
• the larger the company, the more likely it is to have AP handled in a shared services environment (21.1% of companies with over $1 billion in revenue rely on shared services); and
• from a divisional level standpoint, midsize companies (those with from 500-999 employees) are more likely to have AP handled by individual divisions, business units, or departments.

These overall trends hold true across all industry sectors. However, two sectors--manufacturing and the utilities/transportation sectors--are less likely to use a centralized AP operation than other sectors.