Accounts Reconciliation Blog

With many businesses, including colleges there are travel expenses for employees that take trips for work. It might be a conference to further knowledge or for recruiting purposes. Many of the expenses including airfare, hotel and food are included in charges for reimbursement. The expensive administration which is part of the account payable department has to regulate and put through all expenses for reimbursement. The accounts payable expense policies need to be checked before payment can be made.

First of all the expenses need to be verified. Then there has to be a check that these expenses have not yet been paid for. Make sure that the expenses are related to the job. Request more documentation or explanation for any expenses that are excessive. Finally after these steps have been completed then the approved charges are sent to the accounts payable department.

You think that everything is running smoothly in your accounting department. All the numbers in the ledgers match and reconciliation is done for each department and matches. So why do you have this nagging feeling that something is not right?  If you are not watching your accounts payable department and checking that everything is on the up and up then your feeling might be right. Here are some simple ways to check to see if you need to get help.

Look for unusual invoice amount activity
If a vendor’s data is missing
Payments amount to vendors changes and are suddenly higher
A vendor with many cancelled checks.

One of the accounts payable best practices is to cross reference the addresses, zips and phone #s on the invoices with that of the employees handling the accounts payable.
According to and economic crime survey smaller businesses have a far greater proportion of economic crime. This has been discovered through audit processes. By doing regular audits you can catch criminal activity early or prevent it.

When you send an invoice there are certain terms that should be included. Here is a list of the basic items that should be in an invoice:

An ID number
your company name and address
the company name and address that your are invoicing
supply date
invoice date
description of what you are charging for
amount being charged
total amount

The accounts payable payment terms can be as follows:

Net 7 – payment within 7 days of invoice
Net 10 – payment within 10 days of invoice
Net 30 – payment within 30 days of invoice
Net 60 – payment within 60 days of invoice
Net 90 – payment within 90 days of invoice

A flowchart is a diagram showing the steps used to complete a chore. A flowchart is used in many different types of businesses but is commonly know as an accounting tool. An accounts payable flowchart would show the steps that need to be taken from the time the bill is received until it is paid and documented.

Typically flowcharts are made with boxes and lines showing the choice of steps to take. Flowcharts are used for documenting, analyzing and managing the process. The first flowchart was made in 1921 by Frank Gilbreth for an engineering project.

With the economy struggling, it is important to try to cut costs and save money where possible. This is true for families and businesses. One way a businesses can cut costs and save money is with the accounts payable department. Here are some simple ways to improve accounts payable.

Stop the use of paper. By using electronic methods to invoice, purchase orders, receipts and vendor payments can reduce paper handling costs by 90%.

Increase payment terms. If you can negotiate the terms of payment to add one week or more which will be 25% of 30 day terms.

Make use of payment discounts. If you can get 2% discount by paying within 10 days take it. This can mean 18% return on capital.

Reduce errors. By increasing focus you can prevent overpayments, late payments and payment made to the wrong vendor. Errors cost money.

When doing business with other companies you will need to keep accurate records of the amount of money you owe. Below is how to do documenting accounts payable procedures.

1 -  For those debts that you do not pay off immediately, you will need to record the following information in the left hand column of the record:

* The date the debt was incurred
* To whom you owe the money
* Payment terms (for example: due within 30, 60 or 90 days)
* The amount of the debt

2 – In the right hand column of the Accounts Payable Record, you will record the following information:

* The date of any payments
* To whom the payments were made
* The amount of any payments made

The accounts payable department has been going through many changes. The way that procedures are done now have only been in place in the last 2 – 5 years. In order to keep up with the changes it is important to get training at least every other year. By getting training you will be able to keep up with the lastest technologies. By using the new technology to handle AP processing you will be able control costs and save the company money.

While you are doing the AP training you might as well get your accounts payable certification. With your certification you will be showing your employer that you are serious about your job. Also it will put you into a group of professionals whose skills are recognized.

No matter what the size of the business there is one thing that is the same for all businesses. That is accounting and bookkeeping. All businesses must keep accurate records of all financial transactions. In order to be successful the business must have a good way to manage bookkeeping accounting.

In a large business there will often be clerks that handle specific accounts. They will post transactions in journals and in computer files when needed. They will also make sure that the information appears to accurate and complete.

A more specific type of clerk is an auditing clerk. They will verify transactions put in by other workers. They will make sure that everything is mathematically accurate and coded properly.

When you start a small business and you are looking for that magic software that is going to make the accounting run smoothly, make sure that the software has an accounts payable module. You want to start off with the accounts payable best practices so that you do not have tax problems later on. This module will organize the vendor information and transactions for you. It will also allow you produce reports so that you can see what changes need to be made. Most accounting decisions are made from the reports generated in the accounting department.

The accounts payable module will also date your invoices and in many cases tell you when is the best time to pay them. You can also integrate the accounts payable module to work with other accounting modules for a better transition of information.

The accounts payable department also know as AP is responsible to increase controls and reduce time taken to process accounts. By changing the accounts payable procedures this can be accomplished. One way they are able to do this is by using an work process automation system. Documents can be organized and put into virtual filing cabinets which can be called up with a keyword. With the use of this system costs will be reduced and there will be stronger controls over the AP invoice review and approval process.

By eliminating paper documents the department will save time looking for paper documents and files. This in turn will lead to increased productivity. This also reduces the instances of lost documents and late payments. Because it is online several people and several departments can access the documents at the same time.