EXPLANATION ELIMINATE MANUAL CHECKS

41 views

The accounts payable process may be streamlined through the use of many best practices that are listed in this chapter; however, a common recurring problem is those payments that go around the whole preplanned payable process. They are the inevitable payments that are sudden and unplanned and that really must be handled immediately. Examples are payments for pizza deliveries, flowers for bereaved employees, or cash-on-delivery payments. In most of these cases, the accounting staff must drop what it is doing, create a guide check, have it signed, and enter the data on the check into the computer system. To produce matters worse, as a result of rush basis of the payment, it is common for the accounting person to forget to make the entry to the computer system, which throws off the lender reconciliation work by the end of the month, which creates still more work to track down and fix the problem. In short, issuing manual checks significantly worsens the efficiency of the accounts payable staff. One can use two methods to lessen how many manual checks. The initial method would be to stop the inflow of check requests, while the second is (paradoxically) to automate the cutting of manual checks. The first approach is really a hard one, since it takes tallying the manual checks that were cut each month and following up with the check requesters to see if there could be an even more orderly method of making requests later on, thereby allowing more checks to be issued through the normal accounts payable process. Unfortunately, this practice requires so much time communicating with the check requesters that the lost time will overtake the resulting time savings by the accounting staff from writing fewer manual checks. The second, and better, approach, is always to preset a printer with check stock, to ensure that anyone can request a check anytime, and an accounting person can immediately sit down at a pc terminal, enter the check information, and own it print out at once. This approach has the initial advantageous asset of avoiding any trouble with not reentering information into the computer system, because it will be entered there in the initial place (which avoids any future difficulties with the bank reconciliation). It has a tendency to take slightly longer to create a sign in this manner, but the entire time savings are greater.

If one adopts this method, it is essential to think about the cost of the printer. As it is generally a higher priced tractor-feed model, this process is probably not cost-effective unless there are always a substantial number of manual checks being created. A third alternative is to really make the process of making an information check so difficult that requesters will avoid this approach. For example, the request may require the signature of a senior manager (who is going to be significantly less than pleased to be interrupted for the signature) or multiple approving signatures. Additionally, the accounting department could charge an exorbitant amount with this service to the requesting department on the corporate financial statements. Further, a report itemizing all manual check requests may be delivered to senior management each month, highlighting who’s bothering the accounting staff with these items. Any combination of the actions should reduce the utilization of manual checks.

Leave a Reply

Your email address will not be published. Required fields are marked *