Paying bills is never fun,but paying bills that you should not pay in the first place is even worse. There are many risks that can part a small business owner with their hard-earned cash. Your favorite Orange County bookkeepers have listed five common mistakes to watch out for when it comes to your bill-paying process.
Some companies will send marketing documents disguised as invoices to businesses. You may have to read the fine print to notice it is not really an invoice. In some cases, it is simply outright fraud, trying to get you to pay something that is not owed.
Many times, these invoices look official, similar to legal filing requirements, but do not be fooled. Examination of the fine print can save you a lot of money.
Set up procedures to catch these types of invoices. Managers should be careful not to approve these invoices for payment. Bookkeepers should be trained to question their supervisors about these invoices.
Item(s) not received
Three-way matching can prevent paying an invoice for which the goods were never received. Put into place a couple of procedures to prevent this accounts-payable error:
- Have warehouse staff match the shipping receipt to what is in the shipment when it arrives.
- Have accounts payable staff match the marked-up shipping receipt to the invoice when it comes in. If the invoice shows that more items were billed for than received, a call to the vendor to correct the invoice is in order. The invoice amount should be adjusted on the books and a check can be cut for the reduced amount.
Sometimes the wrong price can be listed on the invoice. If this happens, there may have been a misunderstanding during the sales process. A call to the vendor is needed in this case as well so that a corrected invoice can be issued.
Math errors hardly happen in these days of computers, but it can. All invoices should be reviewed for reasonableness. If it does not make sense that something should cost so much, then it probably shouldn’t. In rare cases, a price may have been entered incorrectly or a computer bug could have occurred.
Spot-checking the invoice’s math can save money if an error has been made.
Duplicate invoicing is a common occurrence. We may get an emailed invoice; then the same invoice comes in the mail. Set up procedures to keep an invoice from being paid twice.
Many accounting systems do this automatically, but if one character is transposed related to a vendor name, the system could miss the duplicate entry. Review a list of disbursements monthly to make sure payments do not get duplicated.
Procedures are the answer to reducing accounts payable errors and making sure you pay only the invoices that are truly due.
If you have any questions or need help with your accounts payable, please reach out to your favorite Orange County bookkeepers at Team One Accounting for help!