WHILE ACCOUNT PAYABLE isn’t one of the most glamorous functions in a business, tightening up the way you pay your bills will most likely help you avoid costly errors, eliminate late fees and protect your credit rating. Here’s a checklist for improved bill paying:
- Always check the invoice number and dollar amount against previously paid invoices.
- To avoid duplicate payments, don’t pay from a copy of an invoice, only an original. Log the invoice number into your bookkeeping system when invoices are received.
- Accounting experts target the percentage of incorrect supplier invoices at 5 percent, so it pays to double-check the math.
- Individuals who receive goods and services should create a receiving report, which is then copied to accounts payable.
- Accounts payable should be reviewed regularly. For that reason, it’s a good idea to require a second signature above a certain dollar amount. As a business owner, you tend to notice things like missing credits and incorrect pricing when you review invoices.
- Take advantage of vendor discounts whenever possible.
- Batch payments for improved efficiencies, but pay regularly enough to avoid late penalties.
- Scan documentation relating to unused vendor credits and keep a copy on your network.
- Look into any late payment fees, especially on quarterly federal, state and local tax filings. One company we know did just this and found more than $50,000 in unnecessary late payments that were made in one year alone by a former bookkeeper. Needless to say, they personally made sure that a reminder system was put into place from then on.
- Reduce the amount of vendors you buy from. You’ll get better pricing and consolidate the amount of paperwork and transactions.
- Separate job functions. Don’t make one person responsible for money going into and out of the business.
Advertisement
Laurie Owen is senior vice president at Business Resource Services.
This story is from the November 2007 edition of INSTORE
