Month-End Procedures for Accounts Payable

For a company, month-end accounts payable procedures are money savers, because they enable department heads and functional chiefs to determine how much the business owes and figure out the best and quickest way to pay operating bills. These procedures include activities as diverse as verifying ledger data, counting inventories and determining which vendors to pay first and which vendors can wait for payment.

Check Ledger Data

At the end of the month, delve into the corporate accounts payable ledger to determine how much the company owes overall. You can get the total liability amount by combing through various data summaries, some of which include a trial balance, vendor journals and a balance sheet. Take the total debt number, set supplier liabilities apart from money owed lenders, determine how much the business owes employees and calculate remittances to send service providers -- such as landlords, insurance companies, utilities firms and maintenance contractors.

Count Inventories

Once you have a company's total liability amount, verify that each of its components is accurate. Checking the accuracy of lender statement data and service provider bill amounts is easy -- simply refer to invoices the business received at the end of the month. Confirming that money owed for inventory receipts is correct could be a bit tricky -- which is why you may need to head to corporate warehouses, enlist the help of storage foremen, count inventory items one by one and reconcile the physical count with the amount shown on vendor bills.

Determine Payment Priority

If you work in a company's accounts payable department, the month-end period may see a flurry of activities on the invoice checking, analyzing and payment fronts. Prepare an aging schedule to figure out how many days the business is behind in payments. Pay special attention to vendors in the "60 days past due" and "90 days past due" categories -- those are the ones from whom you may soon receive inimical collection calls, if you haven't already. Check with your supervisor to set up the official list of vendors to pay based on operational or liquidity priority, and forward that list to the corporate treasury department.

Prepare Post-Remittance Payables Report

After a company pays vendors, accounting department personnel typically prepare a post-payment remittance report to evaluate corporate liabilities and think about things like solvency, creditworthiness and strategic management. The latter practice is important to check that the organization's credit standing is favorable, to cultivate better and tighter ties with vendors and to ensure that no past due payment throws the company's overall financial reputation off kilter.

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About the Author

Marquis Codjia is a New York-based freelance writer, investor and banker. He has authored articles since 2000, covering topics such as politics, technology and business. A certified public accountant and certified financial manager, Codjia received a Master of Business Administration from Rutgers University, majoring in investment analysis and financial management.