DigiSonos
Accounts Payable
You work with the IT division of the DigiSonos corporation. DigiSonos is building a digital platform
to rationalize and automate its operations. The new platform will manage most of the Company’s functions (accounts payable,
receiving, etc.). The CEO has set up a steering committee and instructed them to begin implementing the new system. You are
assigned to model the Receiving department.
This is what A/P has sent you.
From: DigiSonos Company A/P
To: you
The A/P department's main responsibility is to pay the vendors. Our industry is adopting the pay-upon-receipt model, as opposed
to pay-upon-invoice. This means that AP pays the vendors based on what we receive. We authorize payment when the receiving
department notifies us that it accepted some goods. We only pay for the quantities accepted by the receiving department and
we pay the prices indicated in our purchase order, which we receive from the purchasing department.
Each order is sent to a single vendor, but may include several items. We need to keep track of partially fulfilled orders,
i.e. orders that require multiple shipments to be fulfilled. We still pay upon receipt of the goods, though.
At this point, disagreements on payments are resolved by a reconciliation specialist (an AP employee) who contacts the
vendor by phone and then manually changes entries in the system. We call these occurrences "reconciliations" and we record them.
Reconciliations are associated to shipments and include a date, the AP employee, the payment that is being modified, and a
brief note explaining what happened.
Our database keeps track of all payments so that our analysts can review them at any time. All our payments are electronic.
An Electronic Funds Transfer module (part of the system) is used to credit the vendors checking accounts at the vendors' banks. We
store the necessary parameters, such as vendor ID, bank routing number, account number, etc.
Thanks again for your help in doing all this.
- Lois Lane, CPA, AP Manager