Would you ever pay an employee through accounts payable rather than payroll?
This may be a challenging or 'trick' question since employees should be paid through payroll; however, a contractor can be paid through accounts payable (A/P) as a way for the company to write their fee off as an expense. Tell the interviewer that you understand the different circumstances that may arise when considering A/P to pay someone for their work or services.
"From my experience, I have only paid contractors through A/P and permanent employees through a regular payroll cycle. There are certain labor expenses that are better handled through accounts payable than through payroll. In this particular scenario, I would ask a range of questions before running a labor-related expense through A/P rather than a usual payroll run."
"There are several times when I have used A/P to compensate a temporary or contracted associate versus utilizing payroll. All of our contractors on 1099s are compensated through A/P. Anytime we hire a vendor to do work for our organization, we invoice and pay through accounting, not payroll."
We use the A/P system to create manual checks if an employee is paid incorrectly. In these situations, we carefully record the information in payroll, as a line item, so our taxes are still recorded properly, and the information is reflected accurately for the employee's W2.
I have also used A/P when giving an employee a loan. This is very rare and approved by the CFO before it can occur. But a loan is paid back with interest. It is not income that should be taxed so it does not belong in the payroll system.
Community answers are written by other candidates practicing this set. Reading how others frame the same question is one of the fastest ways to sharpen your own.
Anonymous Answer
I do know that a number of different types of payments and expenses are processed using accounts payable. However, in this particular situation, I would have to seek out assistance from a leader, ask a range of questions before making this decision. I do believe that any number of extenuating circumstances would cause me to need to pay an employee through accounts payable.
Stephanie's Feedback
It sounds like this is a potentially tricky situation, and it's great that you illustrate your knowledge about payroll vs. accounts payable, while also acknowledging the need to check with a supervisor.
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