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Common Accounts Payable Errors and Resolutions

Published by Summit Marketing Team on 21 Oct 2021

For many small business owners, the whole process of accounts payable can be an intense task. You may be able to go the paperless route and alleviate some headaches in your accounts payable. However, this may also cause new problems for you to navigate through. Below are some of the most common accounts payable problems and solutions for your consideration.

4 Common problems in accounts payable

      • Double payments. This issue may occur if your vendor unintentionally double bills you. For example: if you paid the 1st invoice right away, but before your vendor updates your account, the same bill may be mailed out a 2nd time because your payment wasn’t posted at the time the 2nd invoice was mailed out. This may lead you to think you haven't made a payment yet so you mail another payment so your payment won't be late.

        common errors in Accounts Payable
      • Making a payment prior to delivery. Although there are benefits to paying an invoice as soon as you can, what if your shipment arrives and it’s damaged or has missing items? You're not only out the amount you paid upfront on the invoice for merchandise you don’t have, but you will have to wait even longer for a replacement shipment.

      • Matching errors. If there is a discrepancy discovered between purchase orders, invoices, and other documents, a manual investigation is often required. This error may occur when you pay multiple invoices with one check. For example, You have 3 invoices and all the invoice numbers won't fit on your payment documentation line. Your vendor may apply the whole amount to only 1 invoice instead of dividing the payment between the 3 intended invoices. Therefore, creating past due accounts on the other 2 invoices and making things more complicated.

      • Vanishing invoices. Sometimes invoices get misplaced or even accidentally destroyed before you are able to enter the data in your accounts payable system. Also, when you’re using digital invoices, you may have a hard time knowing if you have the original or a duplicate invoice.
How to solve these issues?

      • Update the A/P internal controls. You’re accounts payable team can help update the internal process. Be sure to document how the invoices should be handled. You should pay special attention to the separation of duties and full use of the purchase orders to be sure your invoices are accurate.

      • Use one inbox for A/P. When you have all your invoices go to 1 inbox, it will help reduce any chance that an invoice will be paid or received twice. You should also limit access to this billing address for authorized personnel.

      • Limited access to your cash accounts. It’s essential that no one without authorization to your cash accounts, review bank reconciliations. This will help to find potential fraud that may occur as well as uncover potentially erroneous payments.

      • Use caution with ACH. You should ensure tight control of a vendor’s automatic access to your company checking account needs. Ensure that you are receiving supporting invoices with your payments and that any automatic payments are on a timely basis.

        Track key performance indicators. Create reports for all paid and unpaid invoices. Check out bank security features that will help identify duplicate payments and allow you the ability to control checks for confirmed payments. Your accounting software should help you identify duplicate invoice numbers and duplicated dollar amounts.
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At Summit CPA we offer multiple resources that will help get your business on the right track. By utilizing our Virtual CFO we have the capability to assist you virtually anywhere in the USA. For assistance, contact our office at 866-497-9761 to schedule an appointment with our advisors.

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