Version 1.0
Prepared by: @Lorraine Sebata
Approved by: @Marcia Wilkinson
Reviewed date: 2025-09-13
Next review date: 2026-09-14
This Standard Operating Procedure (SOP) for Payables - Customer Payments (Bank) is established to ensure the accurate and timely processing of customer payments received directly into the company's bank accounts. Its purpose is to define a systematic approach for identifying, verifying, and applying these payments to the correct customer accounts, thereby maintaining accurate accounts receivable records, improving cash flow visibility, and ensuring compliance with financial reporting standards.
This SOP applies to all Accounting Team members responsible for monitoring bank statements, identifying customer payments, and accurately allocating them within the Accounting Software (Xero) for Easyterms. This includes payments received via direct bank transfers, standing orders, or other electronic bank channels.
Accounting Team Member: Primarily responsible for monitoring bank feeds/statements, identifying customer payments, matching them to outstanding invoices/loans, and accurately recording them in Xero.
Bank: Processes incoming customer payments and provides bank statements/feeds.
Customers: Make payments directly into the company's bank account.
5.1.1 Log into the Accounting Software (Xero) daily or as frequently as required based on transaction volume.
5.1.2 Access the bank account feed within Xero to view the latest incoming transactions.
5.1.3 Alternatively, if bank feeds are not active or for reconciliation purposes, import the bank statement as per the Bank Reconciliation and Bank Statement Import SOP.
5.2.1 Review each incoming bank transaction to identify payments from customers. Look for common payment references such as:
Invoice numbers
Customer names
Loan account numbers
Specific payment descriptions
5.2.2 Xero may automatically suggest matches based on previous transactions or invoice numbers. Review and confirm these suggestions.
5.3.1 For each identified customer payment, verify the amount received against the net repayment in the Loan Management System( LMS).
5.3.2 If the payment matches an existing the repayment amount, apply the payment directly to that specific loan in the LMS.
5.3.3 If the payment does not immediately match an outstanding loan (e.g., partial payment, overpayment, payment without clear reference):
5.3.3.1 Attempt to identify the customer by searching their name, amount, or any other identifiable information in the LMS and Xero's customer records.
5.3.3.2 If the customer is identified but the payment is partial, apply the payment to the invoice and note the remaining balance.
5.3.3.3 If it's an overpayment, apply the payment and record the overpayment as a credit for the customer.
5.3.3.4 If the payment cannot be immediately identified or matched, move the transaction to a 'Suspense' or 'Unidentified Payments' account in Xero for further investigation.
5.4.1 For transactions moved to 'Suspense' or 'Unidentified Payments', initiate an investigation to determine the source and purpose of the funds.
5.4.2 This may involve:
Contacting the customer directly (if identifiable through the bank details).
Reviewing internal records for recent sales, loan disbursements, or other activities that might correspond to the payment amount.
Consulting with the sales or loan officers.
5.4.3 Once the payment is identified, reclassify it from the 'Suspense' account to the correct customer account and apply it to the relevant invoice/loan.
5.4.4 Document all investigations and resolutions for audit purposes.
5.5.1 Ensure all customer payments are accurately recorded and applied in Xero, reducing the outstanding balance of the respective invoices or loans.
5.5.2 Regularly review the Accounts Receivable Aging Report in Xero to ensure that payments are correctly reflected and outstanding balances are accurate.
5.5.3 Perform regular bank reconciliations to ensure that all bank transactions, including customer payments, are matched and accounted for.
5.5.4 Retain all relevant documentation (e.g., bank statements, payment confirmations, communication with customers regarding unidentified payments) as per the Financial Reporting Policy.
Bank Statements/Bank Feeds
Xero Bank Reconciliation Report
Xero Accounts Receivable Aging Report
Customer Invoices/Loan Schedules
Communication Logs (for unidentified payments)
All Accounting Team members responsible for processing customer payments received via bank will receive mandatory training on this SOP and related policies annually or upon significant revisions.
This SOP will be reviewed annually by the Accounting and Finance Departments to ensure its continued effectiveness, compliance with financial policies, and alignment with business objectives and any changes in banking practices or accounting software functionalities.