Accounts Payable Accounts Payable
The Accounts Payable system performs the following functions:
•Maintains a file on each vendor and subcontractor which includes their name, address, phone number, and payment policy.
•Provides for subcontract control including a Subcontract Report.
•Provides a system of entering Trade, Subcontractor and Retention Payment Invoices
•Automatically posts all payable amounts to appropriate General Ledger, Job Costing and/or Equipment Costing accounts.
•Maintains histories of all payments and invoices for each vendor and subcontractor.
•Provides a system of payment selection for any invoice or part of an invoice. Allows for flexible handling of retainage, backcharges and discounts.
•Automatically prints payment checks. Each invoice included in the payment is listed on the check stub. In the case of subcontractor progress payments, a payment history including the contract amount, payments to date, amount retained, and amount backcharged is printed on the stub.
•Maintains a check register history that may be printed at any time.
•Tracks and prints 1099 forms.
•Interfaces directly with the Purchase Order system to allow generation of Accounts Payable Invoices from reconciled purchase orders.
The Accounts Payable program is designed to process and make timely payments to material vendors. A detailed subcontract payment management and control system helps manage subcontracts. The module is fully integrated with the Job Costing, Equipment Costing, Purchase Order and General Ledger programs.
The invoice information is entered into the system. New Vendor information may be added during invoice entry. After invoices have been entered, the system lists the invoices to provide easy verification or correction of entries. Errors may be corrected before actual posting to General Ledger, Equipment Costing and Job Cost accounts. Pertinent reports are produced during posting. Vendor history files are updated with the invoice information and information needed to issue checks.
Payment Process for Standard Vendors
Before paying standard vendors, a Posted Invoice Listing may be printed, showing each vendor and all outstanding invoices and how much money will be required by date. This report helps management determine which of several possible payment strategies to follow (i.e. 'Pay all invoices offering discounts, plus anything due within seven days. Also pay just $1,000.00 against this invoice, and pay all open invoices pertaining to job #120'). The clerical personnel then select full or partial payment of the appropriate invoices. The system will automatically write checks to the designated vendors. A check register is maintained for printing at any time.
Payment Process for Subcontractors
Subcontractor invoices are entered using a method similar to that used to enter standard vendor invoices. The system asks questions pertaining to progress payments, retainage, backcharges, and change orders. The invoices are then posted along with the standard vendor invoices. A Subcontract Report may be printed for any particular job. This report includes detailed information about past payments, backcharges, retention, check numbers and dates. This report may be used to determine a payment schedule for subcontracts.
Payment is selected, and the system prints the checks. Each check stub contains a subcontract payment history. Paid and unpaid invoices are retained on file and classified by vendor until they are removed. Hand-written checks are handled easily and accurately by the system.
The accounts payable process is comprised of three different steps:
1. Invoice Entry and Posting 2. Payment Selection and 3. Check Generation.
1. 5-Step Invoice Entry/Posting Cycle
Please see Making the 5 Step Entry Process a Habit. The posting process produces two valuable reports which should be kept indefinitely. The first is the Posted Invoice Journal. This report shows all the invoices that have been posted to the system. The G/L Summary of Accounts Payable Posting shows how the expenses incurred in the payables application affect job costs and the general ledger.
The Invoice Entry/Posting cycle is the first accounts payable process. Another essential function in Accounts Payable is the Payment Cycle.
A Subcontract Report should be run before payments are made. (NOTE: if the total contract payment history detail is not required, a Posted Invoice Analysis which includes subcontractors may replace this report). The management will scan the report and indicate which vouchers are to be paid. The report will be used as a guide to enter into the system which invoices should be paid and the amount to be paid. Invoices are selected for payment through the Select Invoices for Payment option on the Accounts Payable Payments Menu. A backup should be made at this point, to preserve the entered information
Once payment selection has been completed, checks may be printed through the Print Checks option on the Accounts Payable Payment Menu. An Accounts Payable Check Register is automatically maintained and may be printed after checks are printed. The register may be printed at any time. It contains pertinent check information about the payments made to subcontractors and/or vendors.
This process is similar to subcontract payment. First, a Posted Invoice Analysis is run. The management will indicate which invoices are to be paid or indicate a payment criterion. Select invoices to be paid using the Select Invoices for Payment option on the Accounts Payable Payments Menu. A backup should be made at this point. This is to preserve the entered information
3. Check Generation.
Once payment selection has been completed, checks may be printed through the Print Checks option on the Accounts Payable Payment Menu. An Accounts Payable Check Register is automatically maintained and may be printed after checks are printed. The register may be printed at any time. It contains pertinent check information about the payments made to vendors and/or subcontractors.
Accounts Payable requires no special set up except for the steps covered in the Setup Accounts Payable module. Office procedures should be established to accommodate the accounting system and to ensure that invoices and subcontractor vouchers flow smoothly and consistently through the system.
The names and addresses of current vendors must be entered into the system. This vendor information is stored in the Vendor File. Vendor Lists may be printed for reference through the Vendor Lists option on the Accounts Payable Report Menu. Once the vendor information is in the Vendor File, only the vendor’s reference number needs to be entered when entering invoices.
An alternative to entering vendors all at once through Vendor Entry would be to enter the new vendor as soon as the first invoice from that vendor arrives. The Accounts Payable invoice and voucher entry program is structured to allow entry of a new vendor during invoice entry. This method may be just as convenient as the other.