Multiple Payment Options Present Control Issues

I don’t know about you, but I rarely make payments with a paper check. More often than not, I swipe my credit or check card or pay with an online transfer. This is true for our business as well. Paper checks are quickly becoming a thing of the past while wire transfers and electronic payments are taking the forefront. While these types of payment are convenient and efficient, they create a lack of standardization which can lead to duplicate payments and improper recording.

As more and more firms transition away from paper checks, the more important it becomes for firms to follow set procedures for issuing a payment. The following are some best practice aids to properly manage accounts payable.

• If feasible, limit the payment type to just one format. Whether it is Purchasing cards, wire transfer, or paper checks, using just one format provides better control over the purchasing process.

• Sign off on purchase orders after payment has been made. This is a simple step that can prevent duplicate payment.

• Include the invoice number when coding the payment.

• Make sure that all departments understand the coding standards. These need to be entered in the same manner for each purchase.

• Institute a payment timing policy for all purchases.