Accounts Payable Policy

Company Letterhead

{{company_name}}

{{company_address}}

Phone: {{phone}}

Email: {{email}}

Website: {{website}}

1. Policy Statement

{{company_name}} is committed to maintaining sound financial practices, including reliable and efficient accounts payable operations. This policy ensures that all payments to suppliers and vendors are valid, accurately recorded, properly authorised, and paid in a timely manner, contributing to strong financial controls and good vendor relationships.

2. Purpose

The purpose of this Accounts Payable Policy is to:

a) Establish clear guidelines and procedures for processing invoices and making payments.

b) Ensure compliance with financial regulations and internal controls.

c) Prevent errors, fraud, and duplicate payments.

d) Promote efficient cash flow management.

e) Maintain positive relationships with suppliers and vendors.

3. Scope

This policy applies to all employees, departments, and operations within {{company_name}} that are involved in the procurement of goods and services, invoice processing, and payment authorisation. It covers all types of expenditures, including operating expenses, capital expenditures, and reimbursements.

4. Responsibilities

4.1. **Accounts Payable Department:** Responsible for receiving, verifying, processing, and recording invoices; preparing payment runs; and reconciling vendor statements.

4.2. **Procurement Department/Requesting Departments:** Responsible for ensuring that goods and services are properly received and that purchase orders (POs) are accurately raised.

4.3. **Approving Managers:** Responsible for authorising expenditures, reviewing invoices against approved budgets and POs, and ensuring compliance with company policy.

4.4. **Finance Director/CFO:** Responsible for overall oversight of the accounts payable function, treasury management, and final payment authorisations for high-value transactions.

5. Procedures

5.1. **Invoice Receipt:** All invoices must be sent directly to the Accounts Payable department at {{ap_email_address}} or by post to {{company_address}}.

5.2. **Invoice Verification:** Upon receipt, invoices will be checked for accuracy, completeness, and validity (e.g., correct vendor details, VAT numbers, dates, amounts).

5.3. **Three-Way Matching:** For purchases made with a Purchase Order (PO), invoices will be matched against the PO and the Goods Received Note (GRN) or proof of service delivery. Discrepancies must be investigated and resolved before payment.

5.4. **Authorisation:** All invoices require appropriate authorisation based on the company's Delegation of Authority Matrix. Authorisation must be documented.

5.5. **Coding and Entry:** Approved invoices will be coded to the correct general ledger accounts and entered into the accounting system ({{accounting_software_name}}).

5.6. **Payment Processing:** Payments will be processed according to agreed vendor terms (e.g., Net 30 days) and scheduled payment runs (e.g., weekly on {{payment_day_of_week}}). Electronic Funds Transfers (EFTs) are the preferred payment method.

5.7. **Supplier Statement Reconciliation:** Supplier statements will be reconciled with the accounts payable ledger at least monthly to identify and resolve any outstanding issues.

5.8. **Payment Remittances:** Remittance advices will be sent to suppliers for all payments made.

6. Payment Terms and Discounts

All purchases should ideally be made on standard credit terms of Net {{standard_payment_terms_days}} days, unless otherwise agreed and approved. Early payment discounts, where offered and financially advantageous, should be pursued.

7. Employee Expense Reimbursement

Employee expense reimbursements are processed through Accounts Payable in accordance with the separate 'Employee Expense Policy'. Employees must submit valid receipts and expense reports by {{expense_submission_deadline}} for processing in the current payment cycle.

8. Internal Controls

Key internal controls in the accounts payable process include:

a) Segregation of duties (e.g., invoice processing, payment authorisation, and bank reconciliation performed by different individuals).

b) Three-way matching for PO-based purchases.

c) Adherence to the Delegation of Authority Matrix.

d) Regular review and reconciliation of vendor accounts.

e) Protection of payment system credentials and access controls.

9. Policy Review

This policy will be reviewed annually by the Finance Department and approved by {{approving_authority}} to ensure its continued effectiveness and relevance. Any amendments will be communicated to all affected staff.

10. Signature Block

___________________________

{{approver_name}}

{{approver_title}}

Date: {{approval_date}}