Policies and Procedures Relating to Invoices

Follow policies and procedures relating to invoices

Contents

Introduction

Sample manual

Feedback to activity

Introduction

All organisations have policies and procedures to assist the staff in carrying out their duties.

We will be looking at a policy and procedures statement for accounts payable. The purpose of such a statement is to instruct all staff on how certain functions in a business must be completed. For example, you will notice in the excerpt below that the accounts payable clerk must request tax adjustment notes from suppliers for returned purchases or overcharged invoices. Such instructions are provided so that staff members are clear about what is expected of them. Apolicy and procedures manual documents which staff can approve certain activities and who has responsibility for various functions.

Sample manual

We will look at the manual for Wesellit Department Store. The following excerpt from the manual gives instructions for completing all accounts payable activities.

Let’s look at each point below to find out why it is in the manual.

Policy statement

Firstly, the policy statement:the policy is simply a philosophical statement of how the business views the role of accounts payable. Itsimply says that staff members need to control all monies owed by Wesellit Department Store. It also says that Wesellit Department Store wishes to hold their own money for as long as possible, while making sure that staff pay accounts in time to gain any discount which might be given by creditors. It further reminds staff of the need to work cooperatively with creditors.

Accounts payable—Purchasing
(Policy and procedures manual excerpt)
Policy:
It is important to control all monies owed by the company for purchase on a credit basis. Wesellit Department Store operates according to the accepted business practice of maximising the company’s working capital (ie current assets minus current liabilities) and minimising interest due.
At the same time, prompt payment of monies due is vital. Good relationships with suppliers are valued by the company and no actions of staff should jeopardise these relationships.
Responsibility:
Accounts payable clerk
1Generate company purchase order from purchase requisition and place order with supplier.
2Enter suppliers’ tax invoices as a commitment of funds on the Creditors ledger via the Purchases journal.
3On receipt of goods and the supplier’s tax invoice, prepare the payment voucher authorising the drawing of a cheque.
4Request adjustment notes from suppliers for returned purchases or overcharged invoices as appropriate.
5Ensure all reductions received via adjustment notes are posted to the correct creditor’s account.
6Process cash payments weekly for all approved accounts payable.
7Present cheques for signature to the Financial Controller and distribute the signed cheques.
8Ensure that all cash payments are posted to the correct creditor’s account in the accounts payable subsidiary ledger.

Responsibilities

Assuming you are the accounts payable clerk for Wesellit Department Store, could you carry out all the duties (responsibilities) listed above?

It’s important to know the policies and procedures of any organisation you work for.

Other important information that may be in the policy and procedures manual are:

other staff members you should consult (lines of communication)
reporting lines (who you are responsible to)
the deadlines which must be met.

From the policy and procedures manual for Wesellit, we could summarise the accounts payable responsibilities as:

1Ensureall invoices are accurate by carrying out the following tasks:

check invoices against delivery dockets
check accuracy of invoice charges.

2Use an internal memorandum to notify supervisors of errors, discrepancies and/or the need for a tax adjustment note from the supplier.

3Reconcile suppliers’ statements with source documents held, making necessary adjustments.

4Ensure the purchases, purchases returns and allowances journal and cash payments journal are updated daily.

5Ensure the accounts payable ledger is updated monthly.

6Ensure the accounts payable control account is balanced to the accounts payable subsidiary ledger totals monthly.

7Prepare cheques for signature by the Financial Controller—and then forward the cheques to the suppliers.

8Enter thecheques in the cash payments journal and post these to each individual creditor account in the accounts payable ledger.

9Arrange for all completed source documents to be filed by the filing clerk.

You can see that the policy statement is simply a philosophical statement about how the business views the role of accounts payable in the organisation. It simply says that staff need to control all monies owed by the business and that it does not expect payments to be late or to have to pay interest on overdue accounts.

/ Activity

Rewrite the above responsibilities, except for number 3, in your own words.

Responsibility 1 means ______

______

Responsibility 2 means ______

______

Responsibility 4 means ______

______

Responsibility 5 means______

______

Responsibility 6 means ______

______

Responsibility 7 means ______

______

Responsibility 8 means ______

______

Responsibility 9 means ______

______

Refer to the Activity feedback at the end of this document.

You should allow for your words to be different but it’s important that you get the general idea of each responsibility.

Feedback to activity

Responsibility 1 means I must check:

details of invoices, such as quantity and description of goods ordered against the delivery docket
the mathematical accuracy of all invoice charges.

Responsibility 2 means that I must write out an internal memo to inform the supervisor of the department concerned that I have found an error or discrepancy between the invoice and the delivery docket, which may mean the supplier will have to issue us with a tax adjustment note.

Responsibility 4 means I must use the source documents to complete the details in all three journals every day.

Responsibility 5 means every month I must take the information from the journals and record them in the accounts payable ledger.

Responsibility 6means accounts that are due should be grouped together so that I can draw cheques once each week to pay suppliers.

Responsibility 7means when I have drawn cheques to pay suppliers, I must hand them to the financial controller to sign. Imust then send or pass these cheques to suppliers.

Responsibility 8 means I must record the details of payments to suppliers from the cash payments journal in the correct account in the accounts payable ledger.

Responsibility 9 means I must pass to the filing clerk all the payment vouchers for cheques I have drawn each week.

Follow policies and procedures relating to invoices1