Accounts Payable Procedure

Purpose statement

This procedure outlines the criteria, process and timelines for the centralized payment processing of vendor invoices, Purchasing by-law Schedule B payments, refunds for overpayments, grants, deposits held on account, property tax adjustments, corporate credit card purchases, mileage for non-employees, and any other disbursements processed by the town.

Scope

This procedure applies to all employees who have the authority to act as buyers on behalf of the corporation and in that capacity have purchased goods or services to be used in the delivery of town services or have authorization to approve expenses or refunds. Authorization of expenses or refunds must be in the form of an electronic receipt or hand signed. Signature stamps will not be accepted as approval.

Procedure

Payment of vendor invoices

1. Purchases must be made in accordance with the Purchasing by-law.
2. Purchases must have a purchase order, identified by a system code (either an OP, OU or OS)  entered, approved and received in the town's corporate software, with the exception of Schedule B’s and, in some cases, blanket order related purchases. See Schedule B Payments section of this procedure.  See also Blanket Purchase Order section of this procedure.
3. Purchase orders should be received in the town's corporate software by the department who ordered the items as soon as the goods/services are received.
4. Vendor invoices must be sent directly to the corporate Accounts Payable email by the vendor.
5. Vendor invoices must clearly indicate net amount of purchase, plus freight or administrative charges, and applicable tax amount and applicable business number.
6. Vendor invoices must clearly state the purchase order number (OU, OP or OS) if applicable.
7. Invoices will be sent electronically to the department approver via the town’s accounts payable system in situations where:
   1. The receiving has not been completed;
   2. There are discrepancies between the receiving information and the invoice; or
   3. There is no relevant purchase order information.
8. Departments will approve invoices for payment within a week or, to avoid escalation, advise to hold if services are not approved.
9. Vendor invoices must match the purchase order in the system and be received by department staff before payment will be made.
10. Payment terms for vendor invoices is net 30 days, unless a discount is offered or as approved by the Purchasing department.

Vendor invoices covered by a blanket purchase order

1. All blanket purchase orders issued will describe in detail the agreed upon process for paying invoices.
2. Monthly invoices for costs that are charged to the same account and are for the same amount each month will be processed automatically without approval from the department as long as the invoice matches the approved blanket order in effect.  Accounting staff will use the account number provided on the blanket order.
3. All other purchases covered by a blanket order require a small purchase order (OU) to be created by the department, approved and received before the invoice can be paid.
4. Blanket orders which affect multiple departments will be consistently charged to the same object code.

Purchasing By-law Schedule B payments

1. Schedule B purchases are noted in the Purchasing By-law.
2. Requests for payment must be in the form of a vendor invoice or cheque requisition, clearly indicating the amount plus any applicable taxes.
3. Cheque requisitions are only to be used if no invoice is available and is not procured using an OU or an OP. The requisition must clearly state the payee, full address and HST Registration Number, if applicable.
4. Payment requests must be approved by individuals with suitable approval authority.
5. The appropriate account number must be assigned to the invoice or cheque requisition.
6. Payments will be processed in a timely manner on the next available cheque run or when due.
7. Real estate purchases will be processed once a Property Acquisition or Disposal Form is completed.

Refunds

1. Requests for refund payments processed through Accounting must be done through a cheque requisition including the same information required for processing Schedule B payments listed above.
2. Requests for refunds of deposits, credits on account or tax adjustments will be processed and paid as soon as possible.

Corporate credit card processing (PCOS)

Refer to procedure for Purchasing Card Operating System (PCOS).

Petty cash replenishment

Refer to Petty Cash procedure.

Government requirements

Vendors must provide their HST Registration number before payment is issued.  In the event that a vendor does not charge for HST, Finance will assume that the vendor falls under the CRA small supplier exemption.

Timing of cheque runs

1. Accounting will perform a weekly cheque run.
2. Each week’s cheque run will include all payment requests received by the end of the previous week’s cut-off timeline. Vendors paid by Electronic Funds Transfer (EFT) receive an email notification of the payment.Printed cheques are mailed to the address on the invoice/requisition.Departmental staff cannot distribute cheques to vendors.Exceptions must be documented within the payment software.
3. Emergency cheque requirements will be considered on an exception basis and must be approved by the Supervisor of Accounts Payable.
4. Vendors are encouraged to receive an EFT as opposed to a cheque. All EFT banking set up must be approved by the Supervisor of Accounts Payable or Manager of Accounting.

Cheque cancellation

1. If a cheque is issued for the wrong amount, to the wrong vendor name, as a duplicate payment, or was never received by the vendor, the cheque must be cancelled and re-issued.
2. If the cheque has been released by Accounting, the Stop Payment process must be followed before the cheque can be cancelled and re-issued.

Stop payment process

1. If it is determined that a cheque has been released in error, or has never been received by the vendor, Accounting must determine whether the cheque has been cashed. If the cheque has not been cashed, a stop payment must be registered with the bank for the cheque.
2. Stop payments can be registered with the bank by Accounting staff.
3. Once the stop payment has been registered with the bank then the cheque can be cancelled and re-issued as required.

US cheques

1. The town maintains a US bank account for purposes of paying vendors in US funds.
2. US vendors are set up in the corporate systems address book to be paid in US funds.
3. All purchases with US vendors must follow the purchasing by-law.
4. The corporate system automatically books the exchange rate, so that the GL reflects the expense in Canadian dollars.
5. The exchange rate is determined by the rate in effect when the US funds are purchased to replenish the US bank account.

Certified cheque requests

1. The town does not provide certified cheques.
2. In place of a certified cheque, the town will do an EFT providing the banking information is made available to the town to do the transfer.

Definitions

EFT: Electronic Funds Transfer; funds are transferred from the town’s bank account to a third party’s bank account utilizing an electronic transfer instead of a cheque

OP, OU, or OS: System codes used for purchase orders.  OP amounts are for orders greater than $25,000; OU amounts are for orders from $1 to $24,999; OS are for all inventory purchases.

Schedule B – Schedule within the Purchasing By-law which lists the purchases which do not require a purchase order to be issued.

Responsibilities

The following are responsible for:

Departments/authorized buyers

1. Being in compliance with the Purchasing by-law
2. Generating a purchase order for those purchases not covered by Schedule B of the Purchasing by-law
3. For purchases under Schedule B: approving the invoice, assigning an account number, or completion of cheque requisition in lieu of an invoice, including the appropriate approval and account number
4. Managers, supervisors, and directors are responsible for reviewing the supporting documentation for anything they sign off on whether electronically through the purchasing system or on a cheque requisition.

Vendors

Ensuring they receive authority by way of a purchase order for all goods or services they provide to the town and providing their invoices by email directly to Accounting.

Accounting

1. Processing all invoices in a timely manner, ensuring that proper authority to pay has been received, and that a correct account number has been assigned.
2. Filing (electronically) all accounts payable expenditures in a timely and organized fashion within the corresponding software. This shall be deemed the corporate filing for audit purposes.
3. Retrieving off site records in a timely manner to support departmental requests.
4. Reconciliation of all accounts payable accruals, clearing accounts and received not vouchered balance sheet accounts.
5. Ensuring the corporate accounts payable module is available to support any inquiry or reporting requirements
6. Ensuring that the town maximizes its HST rebates available under legislation.
7. Ensuring new vendors are aware of the option for EFT payments.
8. All EFT banking information is set up appropriately and approved by management.

Purchasing and risk management

1. Reporting all non-compliance of the town’s Purchasing By-law and purchasing procedures and policy to the individual, and senior management as required.
2. Bringing any fraudulent purchases or concerns to the attention of the Deputy Treasurer and Manager of Accounting.