1. Establishing a Standard Accounts Payable Procedure:
Establishing an accounts payable procedure is paramount to ensuring the accuracy and efficiency of all payments. The procedure should clearly define the roles and responsibilities of staff involved in accounts payable activities, including who is responsible for authorizing payments and reconciling vendor statements. It should also specify the manner in which payments should be made, the types of documents required for payment, and the method of maintaining accurate records.
2. Designating a Single Point of Contact for Accounts Payable Activities:
Designate one individual as the sole point of contact to manage all accounts payable activities. This person should have a thorough knowledge of the organization’s accounting policies and procedures and they should ensure that all transactions are properly coded, approved and recorded.
3. Performing Regular Reconciliations and Reviews:
Perform regular reconciliations on vendor accounts to ensure accuracy in transaction recording and processing accuracy. Additionally, review periodically past payments to identify any anomalies or overpayments that may require further investigation or correction.
4. Ensuring Accurate Coding of the Organization’s Funds:
Ensure that all funds allocated to accounts payable activity are properly coded according to the organization’s accounting policies and procedures. This will ensure that expenses are accurately tracked and accounted for each fiscal year, which is especially important for financial reporting purposes.
5. Recording Receipts, Payments, and Other Transactions in the Accounting System:
Record all receipts, payments, and other transactions related to accounts payable activities into the organization’s accounting system. This should be done as soon as possible after entry so as to avoid any discrepancies due to late entries or incorrect information being entered into the system.
6. Storing All Financial Records Securely in Separate Environments:
Securely store all financial records related to accounts payable activities, including invoices and payment requests, in separate environments from other accounting documents. This will ensure that the information is secure and not easily accessible by unauthorized personnel.
7. Providing Access to Data on an as-Needed Basis Only:
Limit access to accounts payable data only to those employees who need access to their job functions. Ensure that any staff members with access are properly trained in how to handle confidential data, and they should be required to sign a confidentiality agreement before accessing the system.
8. Confirming Vendor Identities Before Making Payments:
Confirm vendor identities before making payments by verifying contact information and banking details. This will help to ensure that payments are going to the intended recipient and not a fraudulent source.
9. Requiring Dual Authorization for Large or High-Risk Payments:
Require dual authorization for all large or high-risk payments, such as payments made to international suppliers or those involving large sums of money. This will provide an additional layer of protection against fraud and theft of company funds.
10. Utilizing Appropriate Approval Levels for Different Payment Types:
Establish appropriate approval levels for different payment types so that only authorized personnel can approve the release of funds. For example, consider requiring multiple approvals when making payments over a certain amount or those involving foreign vendors.
11. Implementing an Electronic Payment System:
Implement an electronic payment system to streamline accounts payable processes, improve security and ensure accuracy. This will also reduce the time-consuming manual processing of payments and allow for more efficient tracking and reporting of payments.
12. Conducting Periodic Audits of Accounts Payable Processes and Records:
Conduct periodic audits of accounts payable processes and records to ensure compliance with internal procedures, laws, regulations and best practices. This will help to identify any issues that need to be addressed and allow the organization to make necessary improvements in a timely manner.