The internal controls for the accounts payable department is extremely important. This is the department that signs off and sends out payments. The goal is to avoid double payments, unapproved payments and fraudulent payments.
A great way to set up internal controls for the accounts payable department as well as an invoice approval process is to use software like Quickbooks.
Here are 4 steps to approve invoices using Quickbooks.
Create the Invoice
The most important key to properly managing the accounts payable department is to remain organized. The first step and internal control for this department, therefore, is to create the invoice. The goal is to avoid as many unnecessary headaches as possible. One of the last things this department needs is to receive a bill that does not correspond to an invoice or purchase order.
By creating the invoice, it puts the accounts payable staff on the right path. In a sense, it is a notification that they should expect a bill in the near future.
When the invoice approval process is set up through software like Quickbooks, the process is undoubtedly streamlined operations. Since everything gets recorded and entered into the program, things are less likely to get misplaced or lost in translation from one department to another. There is the opportunity to enter all relevant details with the entry including who approved the inventory in the first place, any necessary notes and exceptions.
Receive the Inventory
Next, it is time to wait to receive the inventory. Once it arrives, it has to be inspected. The staff tasked with the inspection must ensure that the goods received match the invoice. If 1,000 widgets were ordered, they have to double check that 1,000 widgets were received. Then, the condition of the items must be checked.
Checking the condition of the inventory received might be tricky, so the staff has to at least conduct a spot check. All the information observed during the inspection must be entered alongside the corresponding invoice. In the best case scenario, what was ordered will be received without any damage. If there are missing pieces or if a few pieces are damaged, the notes must be made in Quickbooks. A decision also has to be made as to handle a shortage. Those notes are going to be important for the person who is charged with giving the final approval for payments. Ideally, though, the quickbooks invoice approval still makes things simpler.
Enter Bill Against Inventory
Sometimes the bill arrives before the inventory. Other times the bill arrives shortly after. It depends on the supplier and their process. Generally, suppliers bill on a 30-day time period, so you know that when the bill arrives, you do not have to pay it right away. Therefore, you can opt to enter the billing information against the invoice as soon as it arrives. You can also opt to hold on to the hard copy until the inventory arrives. Once all the boxes have been checked off, the inventory information and the billing information can be entered into Quickbooks at the same time. It really just depends on the processes and culture the company decides to follow.
Keeping track of the paper trail is another important key in the efficient approval of invoices. No matter how it is decided that it will be stored, the hard copies have to be kept safe and intact for potential audits as well as the possibility of a dispute internally or externally.
Pay the Bill
Once all the necessary information has been entered into Quickbooks, the bill is ready to be paid. Some companies will wait to pay their bills until the due date. This helps keep the cash flow flowing. Plus, it allows for other bills to be paid on time, too. When the due date rolls around, the goal is to ensure all approvals have been given. There will also be no confusion about the invoice or the bill. One of the complaints an accounts payable department will often have is that tracking down paperwork and approval from the corresponding departments and executives is a mission. With software, everything is kept in a centralized system. This means that there should be little doubt about invoices and bills.
Some companies purposefully make the invoice approval process difficult. When a company is the size of a corporation, there is a lot of paperwork, a lot of hands and a lot of things happening at the same time. This is why internal controls for the accounts payable department are so important and beneficial.
Software like Quickbooks can be scaled with a company. The expense becomes an investment in the long-term. As long as the most competent team is assembled, the data entry will be flawless and the bills will be paid on time, every time.
