In this section, we will focus on all transactions that are considered “Accounts Payable”.
1. Entering Payables and Vendor Credit Memos.
2. Reconciling those Payables to Purchase Orders (when appropriate).
3. Paying Payables with Credit Cards.
4. Manual Checks and Debit Transactions.
It is important to understand the relationship from Sales Order to Purchase Order to Payable.
- Sales Orders – This is, obviously, what your customer orders from you. The important thing to remember here is that Sales Orders BECOME Invoices in the OnSite system, and Invoices will affect your General Ledger.
- Purchase Orders – These are items that you order from a Vendor. In the scenario we are going to look at, items you are purchasing to fill a Sales Order. Purchase Orders DO NOT affect the General Ledger DIRECTLY, but DO affect the GL through the Sales Order they are connected to. The Purchase Order is a contract between you and your vendor where you agree to pay a certain price for certain product under certain terms and conditions. This is the entire purpose of a Purchase Order.
- Payables – These are paper or electronic “requests for payment” from a Vendor. In the case of product purchases, these are linked to Purchase Orders, which are in turn linked to Sales Orders.
Payables Setup & Overview
Payable Credit Card Transactions
Debit Transactions and Manual Checks
Paying Bills and Printing Checks
1. Correct Vendor setup is very important to ensure correct payables. Know the "Golden Rule" when setting up Vendors that you buy product from.
2. Employees entering Payables need to understand the ramifications of doing them incorrectly, and need to be trained accordingly.
3. Procedures need to be implemented for when payables do NOT match the PO. This is a common source of General Ledger errors.
4. Payables should be spot-checked as part of a month-end procedure by a manager/owner to identify any problems, and then correct via training and procedures. DO NOT wait to find and correct these on a yearly basis.
5. Who is going to pay and sign the bills? This should not be the person who entered them unless they are the owner of the company!
6. Would paying bills be a good place to review the bills that are paid to verify that they are entered correctly?