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 - Pay Bills is established to ensure the accurate, timely, and controlled processing of all vendor payments. Its purpose is to define a systematic approach for verifying invoices, obtaining necessary approvals, executing payments, and maintaining comprehensive records. This SOP aims to prevent payment errors, optimize cash flow, maintain good vendor relationships, and ensure compliance with financial policies and reporting standards.
This SOP applies to all Accounting Team members responsible for processing and executing payments to vendors for goods and services procured by Easyterms. This includes the handling of invoices from receipt through to final payment and record-keeping.
Accounting Team Member: Responsible for receiving, verifying, entering, scheduling, and processing vendor invoices and payments. Also responsible for maintaining accurate payment records.
Management Team: Responsible for reviewing and approving payments, especially those exceeding specific thresholds or requiring special authorization.
Vendors: Issue invoices for goods and services provided.
5.1.1 Receive vendor invoices via email or physical mail.
5.1.2 Conduct an initial review of the invoice for completeness and accuracy, ensuring it includes:
Vendor name and contact information.
Invoice number and date.
Clear description of goods/services.
Quantity and unit price.
Total amount due.
Payment terms and due date.
5.1.3 Check for duplicate invoices. If a duplicate is found, mark it as such and do not process.
5.1.4 Digitally record the date of invoice receipt.
5.2.1 Match the invoice with the corresponding Purchase Order (PO) if applicable, as per Payables: Purchase Order SOP and the goods/services receipt confirmation.
5.2.2 Verify that the invoiced amounts, quantities, and terms align with the PO and receipt.
5.2.3 For invoices without a PO, ensure appropriate internal authorization has been obtained for the expense.
5.2.4 Resolve any discrepancies identified during the matching process by contacting the vendor or internal department responsible. Document all resolutions.
5.3.1 Log into the Accounting Software (Xero).
5.3.2 Navigate to the 'Bills to Pay' section or equivalent.
5.3.3 Create a new bill entry for the verified invoice.
5.3.4 Input all required details accurately, including vendor name, invoice number, invoice date, due date, amount, and appropriate general ledger accounts.
5.3.5 Attach a digital copy of the invoice and any supporting documentation (e.g., PO, receipt confirmation) to the bill entry in Xero.
5.3.6 Save the bill entry.
5.4.1. Review all outstanding bills in Xero and prioritize payments based on due dates, payment terms, and cash flow availability, in coordination with the Cash Management Policy .
5.4.2. Prepare a 'Payment Run' or list of bills to be paid.
5.4.3. Obtain necessary approvals from the Management Team for payments, especially for amounts exceeding pre-defined thresholds.
5.5.1 Once approvals are secured, initiate the payment process through the designated payment method (e.g., bank transfer, online payment portal.
5.5.2 Ensure all payment details (bank account, amount, reference) are accurate before execution.
5.5.3 Record the payment in Xero, ensuring the bill is marked as 'Paid' and the payment date and method are accurately captured.
5.5.4 Obtain and save proof of payment (e.g., bank transfer confirmation, cheque stub, payment receipt).
5.6.1. File the original physical invoice (if applicable) and all supporting documentation in a designated vendor file.
5.6.2. Ensure all digital records in Xero are complete and accurate.
5.6.3. Retain all payment records as per the Financial Reporting Policy for audit and compliance purposes.
5.6.4. Periodically reconcile the bank statement with payments made to ensure all transactions are accurately reflected.
Vendor Invoices
Purchase Orders (if applicable)
Goods/Services Receipt Confirmations
Payment Confirmation/Receipts (e.g., bank transfer confirmations)
Bills to Pay Report (from Xero)
Bank Statements
All Accounting Team members involved in the processing and payment of bills 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.