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Accounting Best Practices, Fifth Edition by Steven M. Bragg Englewood, Colorado

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3–31. Automate Payments for Repetitive Invoicing

The typical company has a small proportion of invoices that arrive at regular intervals and are for the same amount, month after month. Examples of such payments are rent invoices or lease payments. These payments usually go through the typical accounts payable matching process, including searches for approval documents, before they are paid. However, it is possible to utilize their repetitive nature to create a more efficient subprocess within the accounts payable area.

The simple best practice that streamlines repetitive supplier invoices is to create a payment schedule to bypass the approval process and automatically issue a check in a prespecified amount and on a prespecified date. This can be done by creating a table of repetitive payments in the accounting computer system; but there is no reason why the programming expense cannot be avoided by just listing the payments on a piece of paper and posting it in the accounts payable area. In either case, there is no need to look for approvals, so there is less labor required of the accounts payable staff. However, there are two problems. First, the repetitive payment schedule must note the termination date of each payment, so that checks are not inadvertently issued after the final payment date. These payments can be time-consuming when the supplier returns them, if the company even notices the overpayment at all. Second, the repetitive payments may change from time to time, so the ...

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