A common problem with accounting and getting accurate numbers at month end at many companies is accounts payable.  If bills are missing, then the financial statements will be off and income will be overstated.  Even when all the payables are in the system, there could be too much time wasted tracking down missing invoices and month end financials can be delayed.

 

This information may not come as smoothly to accounting as it should.  Accounting may be isolated in a different area of the office and not nearby purchasing. 

 

That is all the more reason for our recommendation- that accounting get very tight with purchasing.  You want accounting to know everything that is being ordered by purchasing and when the merchandise or services are set to arrive.

 

One control point can be the mail.  At many firms, invoices go directly to the individual in purchasing. 
Accounting may not be aware of the invoices and therefore not have them on the books. 

 

What I usually suggest is that all such invoices go to accounting first.  Accounting can them make a copy of the invoices for their own records, then route the invoices to appropriate person in purchasing or whomever else is responsible for the order, so that person can sign off on the invoice.  Meanwhile accounting can post the invoice into the system, as pending approval.  The benefit is that accounting at least has all the invoices in hand and has them posted.

 

What about invoices that might not have been received yet?  Another check and balance comes in to play.  Accounting should get some sort of list of all receipts during the month, whether from purchasing or from the system.  This can be used to review for any missing invoices at month end.

 

I had just that happen with a health products client.  The review found that two suppliers had not submitted invoices.  In each case, there was a backorder involved and the supplier was waiting for the order to be shipped in full before invoicing the client.  Armed with that information, accounting told them that they would need partial billings for their month end financials.  Invoices from the two suppliers were faxed over and the client had a good match between payables and receipts for the month.

 

To get your numbers right at month end, make sure you have a tight bond between accounts payable and purchasing.  It can save you lots of surprises on your numbers.