Accounts Payable Articles
Here is a sample article from our monthly Accounts Payable Now & Tomorrow newsletter.
Internal Controls Breakdown:
Recurring and Repetitive Payments
Read more articles like this in our monthly newsletter.
Request a sample issue.
This excerpt is part of a longer article about Internal Control Breakdowns in the Payment Process.
There are a whole variety of items that require the same payment to be made every month. This might include things like rent, equipment leases, loan payments etc. Depending on your industry, there might be other items as well. Rather than create a new voucher each month for the same exact payment, some organizations set these items up to be automatically paid on a recurring basis.
If care is not taken and an end date included in the arrangement, the organization could find itself paying for something it no longer was obliged to pay for. Hence it is critical that when recurring payments are set up, an end date be included rather than have them go on without a light at the end of the tunnel.
The second problem that can occur is when the item is paid off early. In the case of a loan this might be an early payment or a renegotiation to get a lower rate. In the case of a lease, occasionally the lessor will entice the lessee into a new lease for better/newer equipment or whatever. Both of these situations are fine as long as the initial payment is stopped when the new payment stream begins. More than occasionally this does not happen and the original payment continues as well as the new payment.
You can run into the same problem with repetitive payments for services, phones etc. If someone does stay on top of these accounts the organization can find itself paying for services never used. For example, if the phone company isn’t notified when a phone line is no longer needed, it will continue to bill for it. For most organizations this isn’t a problem as it uses all its phone lines. But those who have a significant downsizing initiative may find themselves paying for services not being used. The same can be said for subscriptions, online services, and specialized database access for employees who have left (voluntarily or not).
Strong internal controls protect any organization. It is important to make sure yours cover not only the functions used on a regular basis but also those only used occasionally.
This is part of a series of articles on Internal Controls Breakdown, which began in the October 2012 issue of the Accounts Payable Now and Tomorrow newsletter. Start a subscription before December 15, 2012 and we’ll start your subscription with the October issue so you can read the entire article on Internal Controls Breakdown in the Payment Process.
Want to read more articles like this one on a regular basis?
Subscribe to our monthly newsletter. We have a 6-month option, as well as one and two year options.
If you are looking for a publication containing a half dozen short articles like this, you might consider our Accounts Payable Coffee Break publication. Each contains a half-dozen articles, each of which can be read on a short coffee break. They are also available on Amazon.com for the Kindle.
1) Subscribe to Accounts Payable Now & Tomorrow
2) Sign up for AP Now’s free weekly ezine, delivered to your email account on Mondays or Tuesdays
3) Accounts Payable Webinars
4) Try a sample copy issue of our newsletter, Accounts Payable Now & Tomorrow
5) Accounts Payable Best Practice CD
Stop Duplicate Payments in Their Tracks: A 13-Step Precautionary Plan of Attack
AP N&T Survey Reveals Rush Checks Not the Only Check Issue to Cause Headaches in AP
How to Improve Your Duplicate Payment Detection Rates
© 2011 all rights reserved Accounts Payable Now & Tomorrow & CRYSTALLUS, Inc.