The Fast Close, Part 7 (#22)

In this episode, we discuss how the payables function can be streamlined, so that the time associated with it as part of the closing process is minimized. Key points discussed are:

  • Create an accrual for receipts when there is a purchase order, so that receipts can be priced based on information contained within the purchase order. Works best when structured as an automated report, thereby eliminating calculation time.

  • Create a contract summary file and accrue whatever has not yet been billed to the company. This is useful when accruing for services billings.

  • Some accruals are more facts-based than others, so start with accruals that are solidly based on purchase orders, and then work down through less-certain payables accruals until you reach a point of discomfort with proceeding further, and stop.

  • Use negative approvals for payables, so that invoices are logged into the accounting system as soon as they are received.

  • Reduce the number of required payables approvals, so that invoices are processed more promptly.

  • Use evaluated receipts, where payments to suppliers are based on receipts, rather than supplier invoices.

  • Use procurement cards to minimize the amount of payables activity.

  • Set up a web page and have suppliers enter their invoices directly into your accounting system through the web site.

Related Courses

Closing the Books
The Soft Close
The Year-end Close