Electronic payment procedure

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It is increasingly common for a business to pay a supplier with an electronic payment, rather than with a check or in cash. By doing so, a firm can issue payments at lower cost, more efficiently, and with fewer errors than with check payments. The following procedure is intended for these electronic payments.

Authorize Payment (Payables clerk)

  1. Print the schedule of payments to be made by electronic payment, and forward to the controller for payment approval.

  2. Flag any items in the payables database that are not to be paid at this time.

  3. Set up scheduled payments in the accounting system for all approved payments. Be sure to flag them as being electronic payments; otherwise the system will pay them by check.

  4. Print the preliminary list of payments to be made and compare it to the list approved by the controller. Adjust the scheduled payments as necessary to match the controller's version of the list.

  5. Flag the payment transactions as approved.

  6. Following payment, print the payment register, staple it to the approved payments list, and file the matched documents by date.

Related AccountingTools Courses

Corporate Cash Management

Payables Management

Authorize Large Payments (Controller)

  1. Log in to the payment module in the accounts payable software.

  2. Review all items flagged for payment, and flag them as approved or rejected. If you plan to be on vacation, then authorize another person to conduct this review.

Final Review (Assistant Controller)

  1. Following all payments each day, compare the bank's report of electronic payments made to the approved list of payments. Notify the internal audit staff of any variances found.

Reconciliation

  1. The payer receives a confirmation (e.g., email, SMS, or app notification) and sees the deduction in their account.