When you receive a purchase invoice from your supplier, check the details carefully to make sure that no mistakes have been made. It is much easier to get an invoice corrected before payment is due.
A purchase invoice can be any receipt for goods or services, which also include rent and utility bills.
Try and pay your supplier invoices on time, if there is a problem with cash-flow suggest a short-term payment plan. If you always refuse to take supplier phone calls they are likely to take further action and maybe try and claim the money back through the county courts. If this were to happen, all the costs and interest incurred by your supplier would then need to be paid by you.
There are a few things you could do to try and delay payments if cash-flow is tight. The first is only make payments when they are requested from the supplier. You could also introduce a cheque run date: such as once a week or once a month. Once you have set up a system, it will allow you to keep a better control on finances and suppliers would then know when they would be paid, and not to expect a cheque the same day as their phone call.
Try and keep a good relationship with your suppliers: there is nothing worse than phoning up with an order only to find out that they will not ship any goods to you until payment is made for an outstanding amount or they will only offer you cash with order.
Your supplier should supply you with a monthly statement of account. Check to see if you have received all the purchase invoices and also to see if all payments that you have made have been posted correctly. If there are any discrepancies, contact them to try and get the problem sorted.
If you return goods or have agreed on a credit with your supplier it is worth ensuring that the credit note has been issued before you pay the purchase invoice. It is sometimes much easier to get this sorted out before you make payment.
If you are operating a computerised accounts system then there will be a facility to enter the purchase invoice details to the supplier account. Post as much detail as you can: this will help if you need to trace an invoice, or find out how much a product costs when you reorder.
If you are running a manual system, keep a list of all your supplier invoices received. You will need to record the following: Invoice Date, Supplier Name, Net Amount, VAT and Gross Amount. You may also require a short description to help you should you need to trace an invoice later on.
If you total these up each month it will inform you of your total purchases for the month.
To make finding an invoice easier to find, the best way to file supplier invoices in alphabetical order and then by invoice number order. If you file the newest invoices on the top, this will ensure that they are the easiest to find.
Some accounts departments like to have two files for purchase invoices: one file for invoices paid and another for invoices outstanding.
It is a legal requirement to keep all your paperwork for a minimum of six years from the year end date.
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