𝑾𝒉𝒂𝒕 𝒎𝒆𝒄𝒉𝒂𝒏𝒊𝒔𝒎 𝒅𝒐 𝒚𝒐𝒖 𝒖𝒔𝒆 𝒕𝒐 𝒄𝒂𝒑𝒕𝒖𝒓𝒆 𝒄𝒖𝒕-𝒐𝒇𝒇 𝒆𝒙𝒑𝒆𝒏𝒔𝒆𝒔? 𝑫𝒐 𝒚𝒐𝒖 𝒉𝒂𝒗𝒆 𝒂 𝒑𝒖𝒓𝒄𝒉𝒂𝒔𝒆 𝒐𝒓𝒅𝒆𝒓 𝒔𝒚𝒔𝒕𝒆𝒎?

 𝑾𝒉𝒂𝒕 𝒎𝒆𝒄𝒉𝒂𝒏𝒊𝒔𝒎 𝒅𝒐 𝒚𝒐𝒖 𝒖𝒔𝒆 𝒕𝒐 𝒄𝒂𝒑𝒕𝒖𝒓𝒆 𝒄𝒖𝒕-𝒐𝒇𝒇 𝒆𝒙𝒑𝒆𝒏𝒔𝒆𝒔? 𝑫𝒐 𝒚𝒐𝒖 𝒉𝒂𝒗𝒆 𝒂 𝒑𝒖𝒓𝒄𝒉𝒂𝒔𝒆 𝒐𝒓𝒅𝒆𝒓 𝒔𝒚𝒔𝒕𝒆𝒎?

I’ve seen businesses that have bookkeepers that are great at paperwork but don’t have a clear close process for month-end financial reconciliation. A common problem is not capturing expenses recorded as a liability or an accrued expense because the month-end close process occurs very shortly after the end of the month.

Most companies have an accrual-based accounting system which means they record revenues when earned and expenses when incurred. Not capturing these costs have an impact on the financial statements and cash expectations to cover bills for the following month.

𝑨𝒄𝒄𝒐𝒖𝒏𝒕𝒔 𝒑𝒂𝒚𝒂𝒃𝒍𝒆 𝒎𝒂𝒚 𝒔𝒆𝒆𝒎 𝒍𝒊𝒌𝒆 𝒂𝒏 𝒊𝒏𝒔𝒊𝒈𝒏𝒊𝒇𝒊𝒄𝒂𝒏𝒕 𝒕𝒂𝒔𝒌 𝒊𝒏 𝒕𝒉𝒆 𝒐𝒗𝒆𝒓𝒂𝒍𝒍 𝒐𝒑𝒆𝒓𝒂𝒕𝒊𝒐𝒏𝒔 𝒐𝒇 𝒂 𝒄𝒐𝒎𝒑𝒂𝒏𝒚, 𝒃𝒖𝒕 𝒊𝒕 𝒊𝒔 𝒊𝒎𝒎𝒆𝒏𝒔𝒆𝒍𝒚 𝒊𝒎𝒑𝒐𝒓𝒕𝒂𝒏𝒕.

1. A poorly run process can mean missing discounts
2. Strained supplier relationships
3. Vendors demanding COD terms
4. Paying bills to soon causes unavailable cash for paying other bills
5. Invoices paid twice / Paying fraudulent invoices

To safeguard a company’s cash, the accounts payable process should have internal controls. Periodically companies should seek professional assistance to improve its internal controls.