The example
The steps below use a sample distributor, Lone Star Industrial Supply. Your customers, items and numbers will differ; the window and the fields won’t.
It's Thursday: check run day. Run this week's checks on bank 1 (Operating Account), dated today. The next check run is next Thursday, Thursday, March 12, so pay everything that falls due before then, and take every early-payment discount that is still good on today's date.
Two notes from the AP inbox:
- Purchasing: don't pay FluidLine Hose Products invoice C-37215 ($1,500.00). Half the shipment arrived damaged and they are disputing it.
- Consolidated Fastener Mfg invoice 521404 is held for a price question. It was saved unapproved, so the check run leaves it out on its own.
Precision Bearing Supply gives 2% for paying within 10 days.
Step by step in Scheduled Checks
- 1.
Open Scheduled Checks from the Menu.
- 2.
Type 1 in Bank Number, the Operating Account.
Checks come out of the bank you pick. The Balance beside it is what is in that account now.
- 3.
Next Payment Date Thursday, March 12, the date of next week's run.
The run picks up everything that would fall due, or lose its discount, before the next run. Too early and bills go late; too far out and you pay weeks early.
- 4.
Check Date stays today.
The discount depends on the check date: a check dated after the discount date earns nothing.
- 5.
Untick Pay Invoice on C-37215, the disputed invoice.
Holding it here keeps it on the books and owed, but no check goes out until purchasing settles the dispute.
- 6.
INV-59921 shows a Terms Amount of $76.00: the 2% discount, still good today. Leave it.
Amount To Pay drops by the discount, and the voucher still closes in full.
- 7.
Open the Summary tab to see the checks this run will write: one per vendor.
- 8.
Press Save. to create the checks.
Mistakes that cost money
These are the checks Simetta’s scored test makes on this task, and what each mistake costs a distributor when it happens for real.
Due invoice not paid
The invoice goes past due before the next check run. The vendor calls, adds a late fee, and can put the account on hold.
Early-payment discount missed
A 2% discount for paying 20 days early is worth over 36% a year. Missing it is one of the most expensive habits in AP.
Disputed invoice paid
Once the check clears, the dispute has no teeth. Getting money back from a vendor takes weeks of calls, if it comes back at all.
Invoice paid before it was due
Cash leaves the bank weeks early for no discount. Across a month of check runs that is real money the business could have used.
Check drawn on the wrong bank account
The bank reconciliation breaks and the account the check is drawn on can go overdrawn.
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