(Optional but highly recommended). - Certain physical or document controls may be put in place to ensure that AP transactions are consistently posted. These controls can contribute significantly to the accuracy of your financial information and they can assist you in keeping the AP sub ledger balance in agreement with the balance in the GL Accounts Payable account.
1. Purchase multi-part checks for both the computer generated and manual checks that will be issued by the company. Multiple part checks allow the user to attach check copies to invoices as they are paid (either completely or partially). Care should be taken that the preprinted check numbers for the two check types (computer and manual) do not overlap. Having two check number sequences helps the operator to determine how an invoice was paid and also ensures that duplicate check numbers are not posted to the same bank account.
2. Make sure that all incoming un-posted AP invoices are put in the same place until they have been posted. Set up an "In Box" to store the invoices until they have been posted to the system. If an invoice is paid for with a manual check before the invoice is posted to the system, the copy of the manual check should be attached to the invoice, so that the operator posting the invoice will know to post the payment transaction at the same time. The "in box" also allows the operator to use "batch control" on the invoices that are being entered for a day (an adding machine tape can be prepared to total the invoices that are to be input during the day and the adding tape total can be compared to the AP Entry Register or the AP Account Journal at the end of the day to ensure that all invoices were properly posted to the system).
3. Set up an "In Box" or file to store un-posted AP manual checks (these can be checks for which invoices have not been received, or checks written to pay invoices that were posted to the system previously). Computer generated AP checks are posted to the system as they are printed, so the existence of the check generally means it was posted to the GL.
4. Obtain “posted" or "entered" stamps so that the operator can write the journal entry or register number assigned by the system on the check or invoice being posted. The register number is useful to have when the operator is trying to determine if a document was properly posted to the system.
5. Set up an Open Accounts Payable file. The open AP file is used to store all open invoices that have been posted to the system. At any point in time the invoices in the open AP file should be the same as the invoices that are showing as open in the system. There should be a physical document in the file for every invoice that appears on the Open AP report or AP Aging report. As invoices are posted to the system, they are put in the open file. As payments are made against the invoice, a check copy is attached to the invoice(s) that the check pays for. Once an invoice is completely paid for, the invoice and attached check copy are removed from the open file and put in the closed (paid) AP files.
6. Make sure that no AP invoices are entered into the system without a physical document of some kind to back it up. This ensures that the open AP invoices mentioned in the prior step always match the invoices that are shown on the Open Accounts Payable report. If expenses are incurred which are not backed up with an invoice, the operator should create a voucher or document to be put in the open AP file when the invoice is posted.