BSBFIA303PROCESS ACCOUNTS PAYABLE AND RECEIVABLEPRESENTATION 4

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