For many companies, accounts payable is one of the busiest desks in accounting. A well-written Accounts Payable Policy and Procedure document can help prevent many problems. Here are some things you should consider when composing a policy.
Setting Up Vendors
One of the biggest issues with accounts payable is vendor duplications due to misspellings and errors in the handling of certain kinds of naming conventions. Decide how to use "A," "The," and numerals at the beginning of vendor names. Decide how to set up names of employees who have the same name as other employees as well as people without a “doing business as.” Consistently follow the rules you have set up.
Preventing Entry Errors
Using a yellow highlighter to mark entry information on invoices can help you avoid a lot of errors in manually entered dates and amounts due to phone calls and other interruptions.
Managing Discounts
Accounts payable is a great place to save money for the company by taking all available discounts. Track the discounts taken/missed in their general ledger accounts to let management know how well you are managing accounts payable.
Posting Correctly
Another area where it’s easy to make errors is the posting date. Sometimes invoices come after the end of the period to which they apply. Make sure your policy covers how to handle this issue.
Reviewing Batch Entries
Entering invoices in batches instead of posting them as quickly as they come in is a good way to slow down posting; it offers the opportunity to review everything prior to posting.
Accounts payable is a great place to find ways to save money by following expenses and trends in spending, and good software will make it even easier.
If you need help need selecting a good accounts payable software, please contact us at Oates & Company.
