Page 68 - Accounting Best Practices

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3–32 Use Signature Stamp
practice: The wire transfer does not contain any information about what is being
paid, so a company must still mail a remittance advice that lists each item. This
means that a company must still mail something to the supplier, so it loses any
prospect of savings in this area. However, with the advent of the Internet, it is
possible for a company to send remittance advises to its suppliers by e-mail,
avoiding having to mail this information. Linking an e-mail remittance advice to
a wire transfer is not yet available on any accounting software packages, so a
company would have to customize its accounting software with special pro-
gramming to make this happen. Consequently, one must factor in the cost of the
programming when deciding to use e-mail transmissions.
Given the large number of issues surrounding the use of wire transfers, it is
clear that a company considering its use should carefully weigh all the costs and
benefits before implementing this best practice. Because of the large number of
issues associated with it, usually only larger companies with large check volumes
are tempted to install it.

Cost: Installation time:

3–32 USE SIGNATURE STAMP

One of the most common delay points in the accounts payable process is when an
accounting clerk must go in search of someone to sign checks. If there is only one
person who is so authorized, and who is not always available, it can keep any
checks from being issued at all. The situation grows worse when multiple signa-
tures are required for larger checks. On top of these delays, it is also common for
the check-signers to require back-up documents for each check being signed,
which requires a considerable extra effort by the accounting staff, not only to clip
the correct documents to each check, but also to unclip the documents after the
checks are signed and file them away in the appropriate files (which also
increases the risk that the documents will be filed in the wrong place). This is an
exceptional waste of time, since it does not add a whit of value to the process.
The solution to the multitude of inefficiencies related to check-signing is to
get rid of the check-signers completely. Instead of assuming that there must be a
complete review of all checks prior to signing, one must get management used to
the idea of installing approvals earlier in the process, thus eliminating approval at
the point of signing. Once management is comfortable with this idea, it is a simple
matter of complying with bank regulations, which require a signature on each
“check”—this is now a matter of finding the easiest way to stamp checks, rather
than an approval process. Check-stamping can be accomplished most simply by
creating a signature stamp from the signature of an authorized check-signer,
which requires that someone stamp all checks by hand. A more efficient, though
more complicated, approach is to digitize an authorized signature and incorporate