Accounts Payable

Updated September 2011
Accounts Payable – Operational Procedures
At Bulleen Art & Garden we try to build a good rapport with our suppliers, without them we have no products to sell. It is therefore important to pay our suppliers according to the terms we have agreed to, but do not pay accounts until the account has been processed properly. Good, up to date filing and general tidiness will save a lot of time for yourself and other staff who have to refer to invoices etc.

It is company policy to pay according to the terms of trade agreed to or specified. However you must check with the general manager before paying out substantial amounts of money, eg. end of month, to ensure we have the money in the bank to cover the payments.

There are four categories of account information that we most frequently need easy access to. They are current month paid and unpaid invoices and last month’s paid and unpaid invoices. Delivery dockets, invoices, statements or any other information should be meticulously sorted into these categories in alphabetical order. This must be done daily before you go onto other work or our staff will waste time and money trying to locate invoices so they can price their products. Suspender files allow easy relabelling of files at the end of the month. Plant invoices should be placed in the tray next to the cockpit window and sorted daily. Any invoices stamped “priced” must be filed into the main set of invoices. Do not leave invoices languishing at the bottom of your tray, if you are not sure what course of action to take, check with the office manager.
At the end of the month, all paid accounts should be filed into the current financial year’s files. These are to be filed as soon as the accountant has returned each payment for the month. Place the latest invoice paid at the front of the file. The headings on these suspender files must be continually updated so the individually labelled files are ones that we use frequently.

Invoices and statements should be filed in the month relating to the purchase/payment alphabetically. If the supplier is a person’s name file it under the first letter of the surname. If the supplier is business name file it under the first letter of the business name. Ensure that anyone assisting with the filing knows the above basic rules.
End of Year
At the end of the financial year all invoices and statements are to be put into manila folders and stored in alphabetical order in filing cabinet in the store. Files from previous year should be placed in a box which is clearly labelled with the relevant years, eg. 09/10 and their contents, eg. Supplier invoice and stored in storage room above the classroom.

When the account information for the financial year just ended is being filed, the records for previous financial years should be checked to ensure they are being stored tidily and logically. Check that the boxes from previous years are clearly labelled, indicating which financial year they relate to and keep them in order of years. The information for periods in excess of five years should be tossed out.

Processing COD (cheque) and weekly payments
It is important for taxation purposes that we get addresses and an abn with all invoices (some hobby artists are exempt from requiring an abn and will need to provide proof of such). The invoice will also need to state if the business/individual has charged GST or otherwise
Cheque payments
We try to limit the number of cheques we use to pay suppliers as much as possible. Invoices paid using this method need to be stamped with the ‘cheque paid’ stamp and all appropriate details completed. The cheque butt needs to state, who we paid, how much, what portion is GST, what area it relates to and who authorised the payment.

As with all invoices, prior to any payments being made it needs to be checked off to make sure that we received exactly what we ordered, at the price that we ordered it and that it all has arrived in a satisfactory condition. Cheque payments regularly are made to pay for an invoice just arrived so that we qualify for a COD discount, make sure that any discounts are subtracted before payments are made.
Electronic weekly payments
All 7 day accounts and COD/early settlement discount accounts need to be paid at the end of each week. The invoices for payment are stored in the ‘quick payment’ tray in the office. It will also be necessary to check the ‘nursery’ tray and the ‘filing’ tray for stray invoices. An updated list of who we pay in 7 days and the associated discounts can either be found as a soft copy on the computer or laminated in the ‘quick payment’ tray. Cross check that we have all the necessary invoices for payment and ensure they have been checked off by the area manager or relevant staff member prior to making payments. Have a look over the list of companies that we normally pay within 7 days to make sure that there are no invoices that you might expect to be paying missing. i.e. if it is the middle of spring and we have been paying a seedling company on a weekly basis regularly and suddenly there are no invoices there this week, it is more than likely that the invoice is missing rather than us not making a purchase that particular week. Follow this up any abnormalities with the individual in charge of the section.

Once you are happy that you have all the invoices that you need to pay, sort them into alphabetical order and check for duplicates. Once checked and sorted the invoices will need to be entered into MYOB for payment.

Follow the steps outline in the Office – MYOB payment processing OP.doc file. to process payments.

Once processed all weekly electronic payments need to be stamped with the blue ‘PAID’ stamp, dated and signed. They can then be filed in the current month paid section of the filing cabinet.

Processing end of month payments

It is important for taxation purposes that we get addresses and an abn with all invoices (some hobby artists are exempt from requiring an abn and will need to provide proof of such). The invoice will also need to state if the business/individual has charged GST or otherwise

The invoices and statements have to be checked meticulously before any payments are made.
Check all signatures on invoices, or delivery dockets if relevant, to ensure that they are our staff members. Particular care should be taken when the invoice has been lost and we have requested a copy. On several occasions the suppliers have sent our orders to other nurseries and we do not want to pay for goods we have not received. Yard cartage contractors have dropped materials across the road so you must make sure yard delivery dockets are signed by our staff. Do not pay bulk supplier invoices/accounts until we have a weighbridge docket or quantity docket from quarry or producer (their own docket is not adequate, the system cannot work on the assumption that delivery contractors are honest. This proved a costly assumption in the past, even though some certainly are honest).

If a staff member continually loses invoices, explain to him or her that it creates a lot of work and if this does not rectify the problem notify the manager.

Every invoice needs to be checked to make sure that we received what we ordered at the price that we were quoted and that the products that have arrived correspond to those on the invoice. This needs to be done at the time that the products arrive or are being unpacked, not 6 weeks later when we are about to pay the supplier.
If, for any reason there is an error on the invoice or incorrect, damaged or substandard stock are delivered, a credit will need to be raised with the supplier. This needs to be completed immediately, the longer it is left, the more likely that it will be forgotten about.

To apply for a credit with a supplier the credit request form must be completed, this form needs to be completed even if the credit is arranged in person, by telephone, fax or email. All sections of the form need to be filled out, no exceptions. The form then needs to be left in the ‘filing’ tray, stapled to the offending invoice.

Prior to any payments being made to the supplier, the credits need to be followed up. This may be in the form of an amended invoice, direct credit to our account or replacement stock. On the occasions that replacement stock is supplied, the new stock needs to be checked off as with any other invoice and then stapled to the credit request form.
Never pay the statement of an account without an invoice. All invoices should be sorted into order, attached to the relevant statement and the invoice numbers ticked on the statement to indicate that they have been located and the amount checked. Suppliers should be contacted requesting a copy of missing invoices by the end of second week of the month or as soon as we receive a copy of their statement. If the invoices were posted after the delivery, the delivery docket must also be checked and attached to the statement for inspection by the manager of the appropriate section.
You must have all accounts ready a week before the end of the month, so the manager has time to check them before sending them two days before the end of the month.
Make sure accounts that give discounts conditional on payments being received by the end of the month, are sent with adequate time eg. Swan plumbing.

It is very important that all June accounts/invoices are meticulously paid. You will need to remind some suppliers (eg Mick Moran) to invoice for work to date. Otherwise BAAG is paying tax for the financial year on income it has not earned.
Overdue Amounts
Investigate all amounts, no matter how small, that appear in the overdue columns. They will not go away if you ignore them. It always gets harder to solve the problem the longer you put it off. Remember last months account will frequently appear in the one month overdue column because the company has not banked our cheque from the previous month before running off their statements. DO NOT PAY IT TWICE.
Check that we are getting all the discounts that we are entitled to. Companies frequently promise us discounts and then do not give them. You should check our terms of trade list when doing the end of month accounts, to ensure we are receiving the discounts we are entitled to.
Making the payment
All payments are made by MYOB, refer to Office – MYOB payment processing OP.doc file for instructions on how to process the payments.

Prior to making any payments make sure that the invoice has not already been paid in the weekly or COD payments. Prior to being sent off, the accounts need to be checked by the general manager to ensure there are no abnormalities in the payments. At this stage the general manager will stamp the statements with the red ‘PAID’ stamp, indicating that the payment has been authorised and is ready to go ahead.
MYOB, m-powered services automatically creates and sends out remittance advice, either via email or fax to suppliers as a part of the payment process.
Monitoring of expenses
Rent Payment
Ensure that rent is paid to Parks Victoria, monthly in advance. This is very important regardless of whether there has been an invoice issued. This is very important as it can discontinue the lease if we are ever late. The payment must be diarised to remind yourself monthly.
Phone Bills
Check our phone bills closely and highlight any unusual or expensive calls. Cross check with managers to see if any large bills can be explained by them, then do a very random check of a few of the biggest bills to see who the caller was and report to the office manager.
Water and Electricity bills
Keep an eye out for major changes in any of these bills, an increase in price may indicate significant water leaks that can cost us big money and waste thousands of litres of water. A spike in power usage might indicate an appliance being left on overnight or excessive usage.

To reach high office shelves you must use the step ladder provided not stand on chairs.

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