Professional Documents
Culture Documents
ments are agreeable. I then explain ‘CM.’ The original invoice is en-
that if they dispute/refuse to issue tered and the credit memo we
credit memos the payment will be c r e a t e ’ in h o u s e ’ is a ls o e n -
delayed until resolved. This always tered. The in-house credit memo
works but credit memos are has the record of the information
far preferable to this type of nego- on why the short pay was re-
tiation.” quired and who authorized.”
2) “Paying the full invoice and wait- 3) “We short pay invoices but put a
ing for a credit that may never ar- note in the text field that prints on
rive is not an option in our depart- the check. Our most common short
ment. We offer two alternatives to pays are freight and taxes. Most of
our vendors: our purchase orders state to ship col-
lect and list the method to
a) The preferred method is to ship. Also, as we are in manufactur-
have the person who authorizes ing, many purchases are nontaxable
payment on the invoice call the and the PO will state that. Vendors
vendor and tell them we’ve re- will still charge the tax. We don’t pay
ceived their invoice and want to it and a note prints on the check to
pay it as soon as possible. They state that.”
can then discuss the problem
with the invoice and ask the 4) “We short pay invoicing if the rea-
vendor to either issue a cor- son is a manufacturers defect or a
rected invoice or immediately vendor error in billing (i.e., an over
send over a credit memo (via charge). We usually take discounts
fax or e-mail) to be entered at when paying a vendor’s bill so short
the same time as the in- paying allows us to get a discount on
voice. The invoice will not be everything except the unpaid balance
entered without the credit in question.”
memo. If a new invoice is to be
sent, the vendor knows the in- 5) “We usually will enter a separate
correct invoice will not be sub- bill for the short pay with the original
mitted to accounts payable. invoice number but add a notation
before the number, i.e. CWR123456
b) Vendors usually want to be The original invoice will have just the
paid as soon as they can, so 123456 and we pay the invoice
most often a credit memo is is- amount less the short pay. This al-
sued. Sometimes a company lows us to keep an open bill for the
will not issue a credit memo but unpaid amount on the books.
will authorize short paying. In
that case a credit memo is cre- When we are short paying an invoice
ated ‘in house’ using the same we always make sure that the vendor
invoice number preceded by is alerted as to why we are short pay-
ing and with whom we are working
Accounts Payable Now & Tomorrow (ISSN: 1557-3567) is published monthly for $329 per year by
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Page 3 ACCOUNTS PAYABLE NOW & TOMORROW™
with to get the issue resolved. If we “Once they get used to you stick-
get word that this was an issue on ing to your guns on issues they
our side we immediately pay the are happy because they know
unpaid balance with no discounts that there really is an issue that
taken. needs assistance. We have some-
times noticed management gets
“When we are paying bills weekly, involved because of the under
we see that if we have not received paids to correct this issue at
the credit from the manufacturer hand.
this bill goes unpaid until either the
issue is resolved and or the credit “To get a credit we usually work
has been issued. Once a month we with another department for the
contact vendors requesting an up- credits so the accounting depart-
date on the credits expected for the ment does not know what is going
list of short pays. on (this is why we let them know
why we are underpaying the in-
“When the credit does come in, we voice the day that it should be
remove the notation at the front of paid). This alerts them when
the invoice number (going from there are a large number of short
CWR123456 to 123456) that was pays that might need manage-
originally put on the bill and pay it ment knowledge.”
as usual. The vendor sees the origi-
nal invoice number that was under- 6) “I record the invoice at the full
paid and they can apply the pay- amount, then record an inter-
ment appropriately. nally-generated credit memo. I
document on the paper invoice
“This is a win/win situation for both and in the credit memo 'comment'
our accounting department as well area in the system why we are
as the vendor. We usually do not short paying the invoice. Then I
underpay an invoice unless there is send a copy of the invoice
an actual documented problem on (with the documenta-
the vendor’s side.
More I
nvoice
White Paper: Demise of the Paper Invoice Intelli
gence
The Demise of the Paper Invoice white paper is a 20-page $29.95
report based on our research of the evolving invoice delivery prac-
tices. It is delivered electronically. (So please include your e-mail address!)
• Are Paper Invoices Going the Way of the Dinosaur?
• Readers Comments: Part of the Research for This Paper
• Consultants Corner: A Related Paper Invoice Problem
• No Name, No PO: Guess What? No Check
• Accounts Payable & Sarbanes Oxley Book Excerpt: Invoice Handling Fraud in Accounts Payable
Book Excerpt: Vendor and Invoice Fraud: Not Every Invoice (or Vendor!) Is Legit
• How to Efficiently Handle Detailed Invoices for Small-Dollar Amounts
tion written on it) to the vendor short paying. We also send the
with the short-pay check. I’m vendor a copy of our debit memo
not sure how that would work if with their checks so they can re-
the invoice and/or payment view why we are short paying.”
were electronic, but it works
quite well for old-fashioned pa- 9) “We are a university and are
per transactions.” tax-exempt. Many times when we
receive invoices they include state
7) “We always post the invoice sales tax. We do not pay the sales
at full invoice price and block for tax and we adjust the invoice ac-
payment. When, after approval, cordingly. We then submit a copy
an adjustment has to be made, of our tax exemption certificate
we post a separate debit memo along with the check.”
explaining the reason for the
adjustment and referring back 10) “We short pay our invoices
to the invoice, unblocking the and mail a copy of the invoice to
invoice for payment. The sys- the company with the check,
tem then processes the two showing the item that we short
items together when making paid and write any notes that we
payment as separate line items may have pertaining to the short
on the check or remittance ad- pay. This helps us eliminate some
vice. This way, the vendor sees confusion with the companies as
the full invoice amount as one to why we short paid the in-
line and the adjusting entry with voice. In most cases this takes
explanation.” care of the billing issues.”
8) “We pay the invoices in full The advice offered above by our
and then enter a debit memo readers provides numerous ap-
against the invoice, thus we are proaches for those not willing to
only paying what we agree to return an invoice for correction.
but we have an audit trail of the One of them should work in your
entire invoice and why we are shop. AP N&T
This white paper was created based on research conducted for the
Accounts Payable Now & Tomorrow newsletter.
Subscribers received it as a bonus to their regular monthly issues. They also occa-
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Page 5 DECEMBER 2008
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