POLICY AND PROCEDURES
The following sample outlines a set of policies and procedures for the accounts payable function
To provide standardized policies for paying for goods and services and reimbursing employees.
The intended use of this policy is for domestic office and subsidiaries of Company X.
This policy is for invoices paid by accounts payable primarily for operating invoices (including SG&A),
petty cash - checking account or cash, employee advances, expense reports, casual labor/subcontractors
and fixed assets.
It is the policy of Company X that all expenses shall be captured to the greatest degree practical in the
period in which they are incurred. Refer to Company X’s accrued liabilities policy for the appropriate
guidelines for accounting for accrued liabilities.
All invoices must have the required authorization before they are processed for payment. Please note
that the person requesting payment cannot also approve the invoice. A list of personnel identifying
individuals who can approve invoices that has been approved by the office manager should be
documented at each location. Any items that do not have adequate documented backup or receipts
attached will not be reimbursed. If there is any uncertainty on how to code an invoice or what to pay,
contact the accounts payable department.
1.0 OPERATING INVOICES
Operating invoices are those invoices paid to vendors to operate the business. These include, but
are not limited to, inventory, service/contract work, office supplies, credit memo invoices, rent and
Operating invoices are processed in one of two ways:
1.1 With accounting system generated purchase orders for inventory items. Purchase orders
must be generated by the accounting system for every inventory purchase. The project or office
manager must approve each purchase order before it is entered into the accounting system. The
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respective office payables personnel are responsible for entering the invoice into the accounts
payable log for release by accounts payable.
1.2 Without accounting system generated purchase orders for non-inventory items. These
invoices do not need an accounting system generated purchase order. However, these invoices
require supporting documentation, including, but not limited to, receiving documents, formal and
uniquely numbered manually generated purchase orders and/or hard copy quotes, before they
can be approved, coded and submitted for payment. Non-purchase order items include
service/contract work, parcel service bills, postage, classified ads, magazine subscriptions,
organization dues, car leases, airline bills, commission requests, and leased office equipment.
The project or office manager must approve each invoice before it is entered into the invoice log
within the accounting system. The respective office payables personnel are responsible for
entering the invoice into the log for release by accounts payable.
Offices should obtain three price quotes for contracts and purchases greater than $X.
When invoices are entered into the accounting system log, offices should ensure that the invoice
number entered into the log matches the invoice number as it appears on the invoice. Additionally,
offices not are allowed to enter the invoices directly into the accounting system, and accounts
payable should not enter invoices on behalf of any of the offices.
All domestic office utility bills should be sent directly from the utility company to the accounts payable
department. Domestic offices should not pay any utility bills.
Offices are responsible for sending the following to accounts payable on a weekly basis for release
from the accounts payable log:
• Purchase orders;
• Receiving documents
• Documentation supporting quotes received, if applicable.
A summary sheet providing invoice batch totals and/or a calculator tape verifying the totals must
accompany the invoices. The summary sheet can be printed from the accounting system at the end
of the session during which the invoices are entered into the accounts payable log.
Upon receipt, corporate will match the physical invoices to the invoices in the log. If the invoices
match, corporate will release the invoices for payment and place them in the “open” files. If the
physical invoice does not match the invoice in the log, the accounts payable department will not
release the invoice from the log until they receive sufficient supporting documentation for the
difference. Unmatched invoices will be returned to the respective office for resolution.
The following non-purchase order items must also be recorded as accounts payable: petty cash,
capital expenditures, office leases, and freight.
An invoice approval stamp must be stamped and completed on all invoices sent to corporate and on
all invoices not initially processed through the accounting system. The stamp is uniform throughout
Company X and contains the following items:
• Vendor Number The number assigned to this vendor in the system, input by accounts
• Account Number The account number assigned to this vendor in the system, input by
Company The company code to which the invoice is addressed
Office The office/cost center number
Type The department number
Account The general ledger account number that best describes the expense
• Distribution Amount The amount to pay for a specific account number. The total of all
distribution amounts must equal the total of the invoice to be paid
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Total of Invoice The total amount to be paid
Control Number This number is assigned by the system
Approval Signature Signature approving the invoice
• Date The date the invoice is entered into the accounting system for processing
2.0 AUTOMATED CHECK PROCESSING
Accounts payable processes all standard payable checks, which include, but are not limited to,
vendors, utilities and rent, and all expense reimbursement checks. Accounts payable clerks are
responsible for initiating check runs within the accounting system. The system flags expenses and
processes all outstanding expense reimbursement checks automatically during a system check run.
Accounts payable identifies the standard payables to be paid on a weekly basis within the system.
The check paper must be maintained in a locked cabinet with access limited to the accounts payable
manager and an accounts payable clerk. A chief financial officer stamp signature is utilized to
automatically sign checks for amounts less than $X when the checks are run through the check-
signing machine. Checks for amounts greater than $X require two different signatures. The following
are primary signers on standard payables checks: chief financial officer, corporate controller, and
corporate accounting manager. Circumstances sometimes warrant backup singers. The following
are secondary signers on standard payables checks: chief executive officer and executive vice
3.0 MANUAL CHECKS
It is the policy of corporate that manual checks will only be issued under exceptional circumstances.
Accounts payable personnel should issue manual checks only when the situation warrants the
immediate satisfaction of a payable, and the accounting system is unavailable. Manual checks must
have two approval signatures before they become valid. Each office location must maintain and
update a manual check approval list as necessary and at least every 6 months.
Advances are given to employees on an as needed basis, and require management approval. The
employee must complete the employee advance authorization form. In order to be processed, the
authorization form must be signed by the employee, the department manager and, if the advance is
greater than $X, the corporate controller or chief financial officer. Advances must be issued and
entered into the accounting system by accounts payable in order to offset expenses subsequently
submitted against the issued advances.
Accounts payable should update the advance approval list as necessary and at least every X months.
Company X offers fixed and temporary advances to its employees. Fixed advances are approved for
employees traveling on a consistent basis. Employees are granted a fixed advance that does not
need to be repaid until they leave Company X. As the employee travels, a portion of the advance is
utilized to pay for expenses incurred to date. While the employee waits for expense reimbursement,
the remaining advance balance is utilized to pay expenses as they are incurred during additional
business travel. Therefore, the employee’s advance balance is constantly replenished. The office
and project manager are responsible for reviewing the fixed advance for reasonableness on a
monthly basis and will adjust as deemed necessary. Should the company determine that the need for
the cash advance has been satisfied, Company X will communicate so through the employee’s direct
supervisor. At that time, the advance will be returned to the company in full via cash, or paid down
through crediting of current expenses.
Temporary advances are approved for employees traveling infrequently. Employees are granted an
advance amount that must be supported by expense receipts on an employee’s expense
reimbursement form after returning from traveling. Additional expenses will not be reimbursed until
the cash advance has been repaid if expenses totaled less than the advance.
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Employees must acknowledge that the cash advance is the property of Company X. Employees
must further agree that at termination for any reason, the company can deduct any outstanding
balance from the employee’s final paycheck.
5.0 EXPENSE REPORTS
Expense reports are requests for reimbursement for business expenses incurred by employees. A
weekly expense report must be completed for an employee’s business expenses to be reimbursed.
These should be completed and turned into the respective office administrators by 9:00 AM on the
Monday following the end of the week. Expense reports not fully completed, completed incorrectly, or
without business meal and entertainment documentation will be returned unpaid. Original receipts for
all expenses must be attached. Faxed copies of original receipts are unacceptable. Expenses
without original receipts will not be reimbursed. Vendor invoices, computer equipment, and fixed
asset purchases will not be reimbursed through employee expense reports.
Employee managers must approve employee expense reports, and office managers must initial the
expense reports verifying the validity of the approval signatures. The expense reports should be sent
to accounts payable, arriving no later than 3:00 PM on the following Tuesday. Expense reports
received after 3:00 PM on Tuesday will not be reimbursed until the following week.
If expense reports are received by 3:00 PM on Tuesday, expense reimbursement checks should be
generated received by the employees on Friday. Employees receive expense checks via live check
or direct deposit, which will be mailed to the employee-designated address stored within the
accounting system or deposited in an employee-designated bank account, respectively. This
reimbursement schedule is subject to change at any time.
6.0 CASUAL LABOR / SUBCONTRACTORS
Casual labor/subcontractors are defined as people that work for the company as independent
contractors. They are not employees, they do not have taxes withheld, and they do not have
employee benefits. Before a casual labor person can be paid, their complete name, address, social
security number, and hourly rate must be submitted to accounts payable. Note that casual labor is
not paid through payroll.
It is the responsibility of the casual labor person to maintain their check stubs and copies of their time
sheet, which contain this information. Accounts payable will not provide detailed support for the 1099
When inventory items are physically received, receiving personnel must process a receipt in the
purchase management module.
When invoices for inventory are received, a log match is done to match the invoice with the purchase
order receipt. Since freight is not accounted for on the purchase order, the system will advise the
user that there is a discrepancy between the purchase order and the invoice. The user must
manually input the freight amount and account number. Once accounts payable receives the invoice
for payment, the invoices are reviewed for proper authorization and released.
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