Cash Disbursements: Special Features - Part 5
This is the 5th article in a series about Cash Disbursements. This material is adapted from The Automated Accounting Systems and Procedures Handbook (John Wiley, New York 1991) Chapter 7.
7.5 Special Features
The preceding sections discussed much of the routine, cyclical cash disbursement procedures carried out by the accounts payable department. However, some cash disbursement issues fall outside of the mainstream of routine processing.
ROLE OF THE BANK TABLE
The bank table retains information about different banks and bank accounts that are defined to the system. In addition to the bank and check information shown in Figure 7-9, the system may also use the bank table to retain general ledger account numbers for the cash, accounts payable liability, and discount accounts that are used during cash disbursements.
Through the bank table the system may offer the ability to control the size of payments being processed out of particular bank accounts. This may be used, for example, to enforce paying checks over $500.00 out of a money market account and all other checks out of a general disbursement account (Figure 7-9).
PAYMENT HISTORY INQUIRY
In the past the accounts payable department relied on check copies and/or a printout of the check register for information on paid checks. In a modern environment, the system retains an electronic history of its payments in a file called the payment history file. Having payment history information available on-line relieves the need for retaining copies of canceled checks. This can save time in filing and storing checks. It can also save money: some financial institutions re-duce their per check processing charge by one or two cents if they are not required to send canceled checks back to the organization.
On-line access to payment history information affords easy answers to questions about payments made and remittance information (Figure 7-10). The most flexibility is provided by a system that allows access to the payment history records through
- Inquiry by payment number.
- Inquiry by voucher.
- On-line searching and selection.
Inquiry by Payment Number. Since payment number is the primary identifier of a unique payment record, inquiry by payment number would at first appear to be the most logical way to access payment history information. But usually the accountant that requires this information does not know the payment number at the time of inquiry.
Inquiry by Voucher. More often, the accountant is at a voucher history inquiry screen, possibly answering a question about the payment as it relates to that voucher. Accessing payment history from this screen provides a more usable path to voucher history information.
Occasionally, the accountant may desire to view the details of a specific voucher from the payment history screen. The automated accounts payable sys-tem should provide this linkage as well, allowing the accountant to "hot key" over to this voucher history screen from the payment history screen of Figure 7-10.
On-line Searching and Selecting. Using the search and select capabilities (Figure 7-11), the operator can view a list of payment records and select the one for viewing that he is interested in. This feature is helpful in the event that the operator usually does not have the payment number or the voucher number, or is looking for information about a set of payments.
MANUALLY ISSUED CHECKS
Because check runs are not a daily process and because requirements to prepare checks can come up on short notice, all accounts payable departments have procedures for processing manually written checks. This process is initiated by the requestor (usually a department outside of accounts payable) completing a check request (Figure 7-12). On receiving a completed, authorized check request, the accounts payable department will prepare a manually written check for the requestor and complete the necessary accounts payable processing for this transaction. This includes entering the voucher and payment information into a special screen through which the system sets up the appropriate voucher and payment history records and accounts for the transaction in the general ledger. Purchase orders and the voucher approval process generally do not apply to this case. Instead, the signature on the check request serves as the sole authorization for payment.
In a well-run organization, manual checks are used only for rare exceptions, such as an unplanned employee termination or an unplanned COD delivery. An excessive number of manual checks can indicate problems in other areas of the organization, such as purchasing.
STOPPING PAYMENT
Occasionally, an organization may need to stop payment on a particular check. This requires both notifying the bank and recording this event in the system.
On the system, the status code of the payment record is set to reflect this. The system may prompt the operator for a reason code indicating why payment was stopped. Finally, the system also reverses the general ledger entries for cash disbursement that were created from that payment.
If the original check was lost and there is a need to issue another, the system may automatically print an identical cash disbursement the next time a check run occurs. Without this feature, the accounts payable department must cut a manual check for the original amount. Because all of this takes place with no effect on the voucher(s) paid from that check, this manual check must be accounted for only as a debit to the payable liability account and a credit to the cash account.
Next Month's topic: Management and Administration of Accounts Payable
| About this article and the author: |
Doug Potter is the owner of The Newport Consulting Group a professional management consulting organization that provides clients with information systems planning, selection, and implementation services. He can be reached at dpotter@newportconsulting.com or through his Web site, http://www.newportconsulting.com.
Note: The contents of this article were excerpted from Mr. Potters book "Automated Accounting Systems and Procedures Handbook" Copyright 1991 by Douglas A. Potter, published by John Wiley & Sons, Inc. New York
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