Page 73 - Accounting Best Practices

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Accounts Payable Best Practices
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can be paid for sooner in exchange for an early payment discount. If so, the
accounts payable staff will have a hard time differentiating between the different
terms, resulting in errors that require yet more work to correct.
A possible solution is to create different computer master files for each set of
terms. By doing so, supplier invoices can be assigned to the appropriate supplier
account, resulting in accurate payment processing. However, this best practice
still requires knowing to which account a supplier invoice should be assigned.
This problem can be resolved by forcing the issue back to the supplier and having
it enter the correct supplier code on all submitted invoices, depending upon the
type of transaction submitted.
Cost: Installation time:

3–39 IGNORE SUPPLIER INVOICES AND PAY
FROM STATEMENTS

Many suppliers provide frequent deliveries and services, each one for small
amounts of money. They tend to send large volumes of invoices, which can inun-
date the accounts payable staff. Also, given the high volume of invoices received,
it is quite possible that some invoices will mistakenly be paid twice, especially if
there are no invoice numbers that the computer system can check for duplicate
payments.
One solution to these high-volume, low-cost invoices is to throw them all
away; then, when the suppliers send the usual month-end statement of invoices
outstanding, just record the statement in the computer system, using the state-
ment date as the invoice number, and issue a single payment from that document.
This also works well for the supplier, which receives just one check instead of
many. The only problem with this approach occurs when the underlying invoices
would normally be charged to different departments, which would require one to
see the content of those invoices. However, in most cases, these invoices are so
small that an incorrect or missing expense allocation would have little impact on
departmental financial statements.
Cost: Installation time:

3–40 ISSUE STANDARD ADJUSTMENT LETTERS TO SUPPLIERS

When the accounts payable staff have a valid reason for making a deduction from
a payment to a supplier, this can result in a prolonged series of complaints from
the supplier as to why a short payment was made. The adjustment will appear on
the next monthly statement of unpaid invoices from the supplier, and will likely