Version 1.0
Prepared by: @Lorraine Sebata
Approved by: @Feli Capron
Reviewed date: 2024-07-25
Next review date: 2025-07-25
These procedures outline the specific steps and responsibilities involved in verifying, reviewing, and authorizing bills before they are processed for payment.
The Accountant is responsible for reviewing bills entered into the Accounting Software (Xero) as drafts for accuracy on a weekly basis at minimum, comparing same to Purchase Orders, if any and confirming receipt of items where necessary for approval and payment processing. By following these steps, the payables process remains accurate, efficient, and compliant with financial policies.
Accounts Payable Policy
Accountant: Responsible for reviewing draft bills, verifying against purchase orders and invoices, investigating discrepancies, and approving/rejecting bills.
Vendor: Provides invoices and clarifications as requested.
Internal Departments: Provide verification of item receipt and clarification on discrepancies.
The 'Bills Approval' process should be done on a weekly basis; however, ideally, it should be performed daily when possible.
All bills must be verified against Purchase Orders and supplier invoices to ensure accuracy and completeness.
Any discrepancies must be investigated and resolved before approval.
Approved bills should be promptly processed to avoid payment delays.
5.1.1 From the 'Dashboard' in the Accounting Software (Xero), locate the 'Bills You Need To Pay' box.
5.1.2 Identify the section labeled 'Draft Bills' and select it.
5.1.3 If the amount displayed is '0', there are no 'Draft Bills' to process. If there is an amount displayed, click on it to view pending bills.
5.2.1 Access the 'Draft Bills' listing and select each individual invoice for review.
5.2.2 Verify the vendor account details and cross-check with associated Purchase Order(s) (if any) to confirm amounts, descriptions, and quantities.
5.2.3 Confirm receipt of items or services where necessary.
5.3.1 If Purchase Order matches 'Draft Bill': Select 'Approve' in the draft bills section to finalize the bill for processing.
5.3.2 If 'Draft Bill' does not match the Purchase Order or has discrepancies: Initiate an investigation: Contact the vendor for clarification or missing documentation. Verify with internal departments for potential discrepancies or confirmation of receipt. Request a revised invoice from the vendor if needed. If a bill is deemed incorrect or invalid after investigation, void the entry in Xero. Notify the vendor to reissue a corrected invoice. Document the reason for rejection and communicate with relevant stakeholders to avoid recurring issues.
5.4.1 Once a bill is approved, ensure it is scheduled for timely payment in accordance with agreed payment terms.
5.4.2 Maintain a record of all approved and rejected bills for audit and compliance purposes.
5.4.3 Periodically review past approvals to identify trends, discrepancies, or areas for process improvement.
By following these steps, the payables process remains accurate, efficient, and compliant with financial policies.
Note: Always check the 'Awaiting approval' tab for bills submitted for and awaiting approval.
Accounting Software (Xero) records
Purchase Orders
Supplier Invoices
Records of communication with vendors/internal departments regarding discrepancies
All Accountants and relevant administrative staff involved in the bills approval process will receive mandatory training on this SOP and related policies annually or upon significant revisions.
This SOP will be reviewed annually by the Finance Department to ensure its continued effectiveness, compliance, and alignment with business objectives.