Skip to content
Friday, August 12
  • Advertising
  • Business
  • Career Advice
  • Outsourcing

Business Area

Welcome To Business Area Country.

Business Area

Welcome To Business Area Country.

  • Home
  • Accounting
  • Advertising
  • Sales Training
  • Business
    • Business Travel
    • Career Advice
    • Innovation
    • Security
    • Outsourcing
  • Consulting
  • Blog
  • Contact Us
  • Home
  • Accounting
  • Advertising
  • Sales Training
  • Business
    • Business Travel
    • Career Advice
    • Innovation
    • Security
    • Outsourcing
  • Consulting
  • Blog
  • Contact Us
Trending Now
  • Reducing Toxic Emissions In Industrial Plants
  • How Lighting Can Enhance The Retail Customer’s Experience
  • The Germiest Places In Your Workplace
  • The Cost Of Downtime In Manufacturing
  • The Effects Of A Fast Drive-Thru On Your Bottom Line
  • Choose Rugs for Home or Business
Home>>Accounting>>Ten Best Practices for Accounts Payable
Accounting

Ten Best Practices for Accounts Payable

Joseph Martin
2021-10-19

Healthy working capital flow is of paramount importance to all businesses. This is especially true for small to medium sized businesses. Accounts payable, when properly managed, can be an effective strategy to free up and protect working capital. Here are ten best practices for accounts payable management:

1. Develop a written accounts payable policy and procedures document. A written policy: (a) facilitates employee training, (b) helps to establish a consistent response to routine situations and, (c) may create a framework for appropriate delegation of responsibilities.

2. Identify incompatible duties and implement appropriate segregation of these duties. For example, employees who authorize invoices for payment should not have the ability to edit vendor master files, so too, employees who can edit vendor master files should not be allowed to process vendor invoices. Where possible appoint someone, not otherwise involved in the accounts payable process, to monitor changes to vendor master files.

3. Where possible make purchases from pre-approved vendors only. This could help negotiate more favorable terms.

4. When new vendors are added to the system, be sure to send a new vendor welcome letter. The letter should detail where invoices must be sent and any information necessary to process vendor invoices such as the completed w-9 forms, which are needed for the annual preparation of form 1099. There are hefty fines for non-compliance with 1099 reporting.

5. Have all vendor invoices sent to the accounts payable department, where they should be logged, before they are sent for approvals. This procedure reduces the incidence of lost and missing invoices.

6. Do not enter vendor invoices as a batch. Instead, enter each invoice separately as this facilitates the resolution of variances and provide a better audit trail.

7. Establish a specific procedures for processing vendor invoices, including the assignment of invoice numbers, (where vendor invoices are unnumbered or in the case of internal documents such as employee expense reimbursements) and entering invoice numbers.

8. The invoice amount should be entered as billed. Debit memos and adjustments should be posted as separate transactions as this facilitates account reconciliation and resolution of variances.

9. Define the default general distribution codes, where possible, as a part of new vendor set up procedures. Code all vendor invoices with applicable general ledger codes before posting. Both of these procedures reduce the possibility of errors.

10. Pay vendor invoices timely and take advantage of any discounts available. Discounts can add up to significant cash savings, and consistently paying invoices timely can help avoid the outlay of cash for late fees and interest and, set the basis for the negotiation of better vendor terms.

Previous Post

Mistakes To Avoid When Choosing A Career

Next Post

How To Choose The Right Size Of Furniture For Your Home

Related Articles

Accounting

How to Choose a Right QuickBooks Software for Your Small and Mid-Sized Business

Accounting

International Accounting Fraud

Accounting

10 Things to Find Out While Selecting a Small Business CPA Firm

Accounting

How Small Businesses Can Save Efforts and Expenses With QuickBooks Hosting

Accounting

6 Common QuickBooks Issues and How to Solve Them

Search

Recent Posts

  • Reducing Toxic Emissions In Industrial Plants
  • How Lighting Can Enhance The Retail Customer’s Experience
  • The Germiest Places In Your Workplace
  • The Cost Of Downtime In Manufacturing
  • The Effects Of A Fast Drive-Thru On Your Bottom Line
  • Choose Rugs for Home or Business
  • What Are the Benefits and Risks of Implementing Global Help Desk Services?
  • Welding Equpiments

Categories

  • Accounting
  • Advertising
  • Business
  • Business Travel
  • Career Advice
  • Consulting
  • General
  • Innovation
  • Outsourcing
  • Sales Training
  • Security

Newsletter

Email Newsletter
Loading

Categories

Accounting Advertising Business Business Travel Career Advice Consulting General Innovation Outsourcing Sales Training Security

Email Newsletter

Email Newsletter
Loading

Quick Links

  • Home
  • About Us
  • Privacy Policy
  • Blog
  • Contact Us
  • Sitemap

Recent Posts

  • Reducing Toxic Emissions In Industrial Plants
  • How Lighting Can Enhance The Retail Customer’s Experience
  • The Germiest Places In Your Workplace
© 2022 Business Area | WordPress Theme Ultra Mag
  • Home
  • About Us
  • Privacy Policy
  • Blog
  • Contact Us
  • Sitemap