TEKOA software  

Login  |   Contact Us  | Search



The Accountants Advice for Good Accounts Payable

Chase Dammarell 
Best Practices for Accounts Payable

A best practice is a method or technique that has consistently shown results superior to those achieved with other means, and that is used as a benchmark."  - Wikipedia

As it relates to business, best practice is process of building a system that works across multiple organizations. These systems should evolve over time as they are used, integrating new ideas and technologies.

Benefits of Best Practice

Maintains quality

Improves firm performance

Standard for the organization helps with goal setting

Ensures the business is running in the most efficient manner

Reduces business risk

Applicable to multiple companies in an industry

Stockholder satisfaction

I recently took a class about occupational fraud and abuse in which we discussed the many ways people take advantage of organizations. I learned that accounts payable schemes are some of the easiest and most prolific frauds committed, so I thought it would be interesting to get a deeper look into best practices for A/P. Internal controls and oversight are some of the hallmarks for implementing a successful accounts payable system, so they are reflected in the characteristic below.

5 Best Practices in A/P

1. Make sure W9 is on file for vendor- before an invoice is paid to a supplier, there should be a verification of the appropriate W9 form. All the information for the vendor is present on this form, which helps with writing checks, and keeping track of filings will make preparing 1099 forms that much easier at the end of the year. There is a substantial fine from the IRS for noncompliance with 1099 regulations, adding extra incentive to be organized.

2. Have strict requirements on who can access the Master Vendor File- my occupational fraud class talked about this step extensive because it is so important. False vendors and/or unapproved vendors are often means by which employees commit fraud, so to limit this, there needs to be segregation of duties. As such, only a select few workers should have access to the Master Vendor List. It bears repeating that internal controls are critical for organizations.

3. Implement oversight and segregation of duties- as I mentioned earlier, tasks must be separated across a business. In accounts payable, this means splitting the duties of approving purchases, handling billing, processing payments, and check signing (to name a few) amongst multiple employees. Control is one of the prime motivations for committing fraud, so allowing one person to handle every part of a task (such as check processing) is both dangerous and stupid. In addition, every member of an organization should be accountable to someone else—or multiple people for that matter. Making sure everyone reports to another further lowers the chance of fraud occurring.

4. Check for duplicate payments- whether it is accomplished by an automated accounting system or through diligent review (preferably the former), a company needs to make sure they are not forfeiting unnecessary cash via duplicate payments. This will make sure cash flow is accurate and should promote neatness in the business’s financial statements.

5. Review!- this practice is incredibly important for all companies; it cannot be overstated. Periodic reviews of the books are essential to maintaining a smooth-running, fraud-free organization. Particularly as it pertains to A/P, vendor invoices should be reviewed for accuracy, goods and services purchased should be verified to make sure they were actually received, and monthly reconciliations of operating ledgers should be performed.  





The Upside and Downside of Cloud for Business

Cloud computing does far more good than bad. For one it doesn't require any software like you have t...





B2C Online Commerce for Sage 100

Open new revenue channels with an online ecommerce storefront for Sage 100. Seamlessly integrated with Sage 100, easily manage all your online information with one centralized data source.





Using ERP to Conquer Inefficiency in Your Business

Imagine this scenario: you finally realized your childhood dream of inventing and manufacturi...



Tekoa Software Twitter

Tekoa Software LinkedIn

Tekoa Software YouTube

Tekoa Software Facebook

Tekoa Products




Legacy Sage 100 Services

About Tekoa


 Contact Us


 Terms of Use


 Copyright Tekoa Software Inc.  All Rights Reserved