HomepagePage 2Page 3


An Effective Payment Process

Payment processing is a very integral part of an organization. It ensures that amounts owned by the company are paid on time and according to the agreed or negotiated credit terms. It also ensures that overheads such as salaries, rent, electricity, water, travel expenses, insurance, taxes, and advertisement are paid on time. Proper payment processing measures ensure funds are properly utilized in the firm. The most important factor to have in mind is that payments should be accurate and non-fraudulent. In addition, the firm should only pay for goods and services which have been received.Quickly head over to tipalti.com.

There are two steps that a firm can take to provide efficient, accurate and truthful payment. This are strong internal control systems and system automation. Internal controls ensure that there is a separation of duties in the firm. This eliminates the possibility of one officer performing all accounting processes in the firm. If a single person is carrying out all the payment processes, it is easy to manipulate records. On the other hand, automated systems make work lighter for the financial personnel and complete payment processes faster and more accurately.

As a firm grows, it becomes impossible to pay for goods and services in cash. Most of the goods and services are taken on credit terms and paid for after a pre-negotiated period of time. This could be after a fortnight, monthly or quarterly. There are important checks that a good account payable system should have to ensure they do not make erroneous payments. First and foremost, a company prepares a purchase order which prescribes the number of goods needed, the cost per unit and specification of the items. Based on this, the approved vendor provides the ordered goods.

As soon as the vendor supplies the goods that were ordered, the person receiving these goods prepare a receiving report. This report indicates which goods were supplied, the quantity and the unit cost of the goods. Thereafter the vendor can furnish the buyer with an invoice. The invoice is the official document used by suppliers of goods to claim for payment of their goods or services. The three documents are relied upon by the finance personnel to approve and make payments.

At the point of payment, the accounts officer compares the three separate documents to verify that the goods supplied were as per the specification of the firm. These documents are the purchase order, receiving the report and the vendor's invoice. In addition, the accountant looks out for any discounts offered in order to reduce the total cost of goods. Another item that requires verification before a payment is made is goods returns. The accountant verifies that such goods were returned and proper documentation to this effect was made. Thereafter they prepare a voucher so that they can effect payment. This voucher is approved by senior financial officers and paid. This process is made less tedious when the system is automated.You need to get informed about many things such as what is an ach transaction.

Other details can be accessed at https://www.youtube.com/watch?v=E31QkzwvWZI .