The Beginners Guide To Services (What You Need To Know To Get Started)

Protect Your Working Capital with Accounts Payable Management It is important for all businesses to have a healthy working capital. Small and medium sized businesses should see how important this is. You can free up and protect your working capital when you properly manage your accounts payable. To properly manage your accounts payable, here are some of the best practices you can consider. You business needs a written accounts payable policy and procedures document. Facilitating employee training, helping establish a consistent response to routine situations, and creating a framework for appropriate delegation of responsibilities are the benefits of having a written policy. Incompatible duties should be identified and segregated. For example, if an employee authorizes invoices for payment, he should not have the ability to edit vendor master files, and those who can edit vendor master files, should not be allowed to process vendor invoices. Where possible, someone else should be appointed who is not involved in the accounts payable process so that he can monitor changes to vendor master files.
Overwhelmed by the Complexity of Companies? This May Help
Where possible, purchases should only be made from pre-approved vendors. The reason for this is to be able to negotiate more favorable terms.
Overwhelmed by the Complexity of Companies? This May Help
there should be a new vendor welcome letter send to new vendors that are added to your system. New vendors should be informed on where to send their invoices and other information needed to process vendor invoices like the completed w-9 form which is needed for the annual preparation of the 1099 form. If there is non-compliance with 1099 reporting, there are hefty fines for it. All vendor invoices should be received by the accounts payable department. There is proper recording made by the department before they are sent for approval. This procedure reduces the incidence of lost and missing invoices. It is not good to enter vendor invoices as a batch. it is best to enter each invoice separately so in cases of variances, it facilities its easy resolution, and proves a better audit trail. There should be specific procedures for processing vendor invoices and this includes the assignment of invoice numbers even to those invoices which are not numbered or for internal documents such as employee expense reimbursement, and these numbers should be entered. When the invoice amount is entered is should be entered as billed. There should be a separate posting for debit memos and adjustments so that in case of variances it can facilitate account resolution and reconciliation. As part of new vendor set up procedures, default general distribution codes should be defined. All vendor invoices with applicable general ledger codes should be coded before posting. With this, there will be reduction in the possibility of errors. Vendor invoices should have timely payments and you should take advantage of any available discounts. You can add up to significant cash savings with discounts, and if you make timely, consistent payment to invoices, it can help you avoid the outlay of cash for late fees and interest, and set the basis for the negotiations of better vendor terms.

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