PRESENTATION OBJECTIVES
At the end of this presentation you will be able to:
• Process payments for accounts payable Accounts receivable
ledger and schedules
• Reconcile accounts payable statements with accounting records
• Check payment documentation for accuracy of information
• Rectify errors and discrepancies
PROCESSING PAYMENTS FOR SUPPLIERS
It is important to maintain good working relationships with your
suppliers and contractors. If you have a reputation as a slow or poor
payer you may not find they are willing to supply you on credit. They
may demand that you pay up front before they will supply you.
It makes good sense to pay on time as far as possible.
• Maintain your records regularly to be aware of the amount of
money you owe and when the payments are due.
• Balance records regularly to confidently know what is due when.
• Schedule payments accurately
• If there are opportunities for early payment discount it may be
worthwhile for your cash flow, you will not know this if you have
not conducted the first two steps!
RECONCILE
Accounts payable processManage
the system to receive goods, cross check
invoices
Check source
documents invoices
from suppliers including credits for returns
Statements from
suppliers, including
all payments
made
Do they match?
If yes then you
have reconciled
If not, identify
discrepancies - ask for help if needed
It is the end of the month, your suppliers are getting ready to ask for the money that you owe them.
They will send a statement based on their records.
You need to make sure their records and your records match!
How can you do this?
ACCOUNTS PAYABLE – (AP)
Remember these are the documents you need to use to reconcile
these ledgers:
As discussed prior use the purchases journals and manual checks of
stock received and accepted to be sure entries are correct.
The staff member who placed the order needs to confirm the safe
and accurate arrival of all items via the delivery docket and the order.
Are
AP•You receive invoices from your suppliers•They make adjustments for your:•Discounts allowed•Returns
•They record any payments made by you against the particular invoice paid•They issue a statement
SCHEDULES OF AP
Accounts payable schedule as at 30 September 20XX
Supplier Total Current 30 days 60 days 90 days Doug’s Factory $1,050.00 $1,050.00
Swan Pipes $1,800.00 $1,548.00 $252.00 Jimmy’s Joiners $1,004.00 $1,004.00
Earls Earthmoving Hire $1,245.00 $1,180.00 $ 65.00
Total accounts payable $5,099.00 $4,782.00 $ 65.00 $ 252.00 $ -
The AP ledger (right) provides
the detail of all transactions in
accounts payable for the
business.
The next step is to create an
ageing summary or a schedule
- summary of information
regarding the total amounts
payable for all suppliers and how
old these amounts are.
In this example, the total
amount you owe your
suppliers is $5099.00
Accounts Payable
Doug’s Factory
Date Particulars Invoice Debit Credit Balance 31-Aug Opening Balance $ -
5-Sep Invoice JJ123 $500.00 $500.00 cr 14-Sep Invoice JJ124 $550.00 $1,050.00 cr
Swan Pipes
Date Particulars Invoice Debit Credit Balance 31-Aug Opening Balance $200.00
2-Sep Invoice SP456 $950.00 $1,150.00 cr 28-Sep Invoice SP489 $650.00 $1,800.00 cr
Jimmy’s Joiners
Date Particulars Invoice Debit Credit Balance 31-Aug Opening Balance $252.00 cr
7-Sep Invoice 124 $ 656.80 $ 908.80 cr 18-Sep Invoice 132 $756.80 $1,665.60 cr 27-Sep Invoice 139 $752.00 $2,417.60 cr 28-Sep Payment EFT $1,413.60 $1,004.00 cr
Earls Earthmoving Hire
Date Particulars Invoice Debit Credit Balance 31-Aug Opening Balance $65.00
5-Sep Invoice 23EE $520.00 $585.00 cr 7-Sep Invoice 28EE $610.00 $1,195.00 cr
13-Sep Invoice 32EE $50.00 $1,245.00 cr
STATEMENTS
• We have received the following statement from Doug’s Factory in
this case we are able to reconcile this easily
• If there were more transactions and a payment which hadn’t been
applied this would not be as easy to reconcile
Statement
Doug’s Factory Date:
Address xxx xxx xx ABN: XX XXX XXX XXX
Terms: Net 30 days. A finance charge of 1.5% will be charged on unpaid balances
Date Invoice # Charges Credits Balance
5/9/XX J J 123 $500.00 $500.00
14/9/XX J J 124 $550.00 $550.00
Total $1 050.00
RECONCILE
How can you be sure that all of this is balancing and correct?
Check your accounts payable ledgers and schedules against the
statements from each of your suppliers.
Example: Jimmy's Joiners has sent you a statement recording the
final balance as different to your records. You will need to identify the
mistake or difference:
• Are the invoices all entered properly? Use invoice numbers and
dates to cross check amounts
• Are there any returns, discounts or credits?
• There may be an entry problem from either end, you cannot
reconcile your account until you deal with the differences
STATEMENTS• This statement is not in balance with our records
• The schedule states that we owe Jimmy $1004.00
• The invoice in question is invoice 139 they have the total as $725, we say $752,
which one is correct?
• The only way to tell is to check with the original document
• It is unlikely that automatic software will generate an error, it will always be an
input issue, check invoices additions, and statements every timeStatement
J immy’s J oiners Date: 30/9/XX
Address xxx xxx xx ABN: XX XXX XXX XXX
Terms: Net 30 days. A finance charge of 1.5% will be charged on unpaid balances
Date Invoice # Charges Credits Balance
31-Aug Opening balance $252.00
7-Sep 124 $ 656.80 $ 908.80 18-Sep 132 $756.80 $1,665.60 27-Sep 139 $725.00 $2,417.60 28-Sep $1,413.60 $977.00
RECONCILE ACCOUNTS
Remember you are required to work within all organisational
requirements, these include the following:
If you are unsure of any detail you must check with your supervisor,
authorised person, policies and procedures or external source.
Timelines
•Work with any set timeframes in your organisation
Reconciling journals
•How often are you required to perform a reconciliation? What can you do if there is a problem?
Legal and organisational requirements
•Understand and comply with all legal requirements •Your organisation will have policies around the areas of financial management
WHS requirements
•You must comply with safe working procedures at all time•Any reasonable request must be adhered to •Contribute to safe work for self and others
Security•Work to all security procedures:•Cash handling•Privacy and confidentiality•Back up systems
PAYMENT DOCUMENTATION
You have checked all the invoices, credits and payments with the
statement from your supplier.
Once you have determined the accuracy of the statement you are in
a position to make payments with confidence to your suppliers.
Remember the documents to be checked include:
• Invoices
• Returns or credits
• Remittance advice regarding payments received by them from you
• Calculation of any early payment discount
Now you can arrange to pay them.
PRESENTATION OBJECTIVES
Now that you have completed this presentation, you will be able to:
• Process payments for accounts payable accounts receivable
ledger and schedules
• Reconcile accounts payable statements with accounting records
• Check payment documentation for accuracy of information
• Rectify errors and discrepancies