YOUR HOTEL HEADER
                  Issued by:                                                                                   Division:
                                                              Standard Operating Procedures
                  Revised:                                                                                     Department:
                                                                        Approved by:                           Finance
                  Distribution:                                                                                Code: FI 018
                            Subject                                   Payment Control                               Page: 1 of 7
                  PURPOSE
                  To ensure that the Hotel only pays for goods and service which are bona-fide purchases.
                  POLICY
                  The Hotel will pay all suppliers in accordance with the stated terms and conditions provided there is:
                           a)      evidence of authorisation for the purchase;
                           b)      proof of delivery of the goods or satisfactory performance the service ordered.
                  The Hotel will also keep an accurate record of all un-discharged liabilities for purchases.
                  PROCEDURES
                  1.       VOUCHING OF DOCUMENTATION
                           1.1     The responsibility for the recording of liabilities for expenditure and ultimately payments, 
                                   rests with the Accounts Payable Clerk.
                           1.2     The documents which have to be matched are:
                                   a)       the receiving and accounts payable copies of the purchase order;
                                   b)       the Goods Received Note (GRN) and / or delivery note;
                                   c)       the suppliers invoice.
                           1.3     All of these documents should be related by the details of the purchase order.
                  2.       RECORDING OF DELIVERY NOTES AND INVOICES
                           2.1     The quantity and quality specification should have been checked by the Store man at the 
                                   time that goods were accepted. In the case of service, the signature of a department 
                                   head or management executive should be obtained as proof of satisfactory performance.
                                                               YOUR HOTEL FOOTER
                                                         YOUR HOTEL HEADER
                         Subject                               Payment Control                          Page: 2 of 7
                        2.2     If the price shown on the invoice does not agree with the purchase order, the invoice and 
                                documentation should be referred to the purchasing department who should advise if the 
                                invoice price should be accepted.
                        2.3     Each delivery of goods to the Hotel should be accompanied by an invoice or a delivery 
                                note. Where there is not an original invoice, the Store man will complete a Goods 
                                Received Note (GRN), listing the details that are usually found on a supplier’s invoice. 
                        2.4     All deliveries received by the Store man, whether destined for the stores or to be treated 
                                as a direct issue, should be entered the same day into the inventory system by the Hotel 
                                Accountant. After posting, the documents will then be sent to the Accounts Payable Clerk.
                        2.5     The Accounts Payable Clerk should ensure that he/she has received all the delivery 
                                notes and invoices for the day, and that they have been correctly posted by checking 
                                them to the Goods Received Without Invoice (GRWI) Detail Report and the Batch Edit 
                                Report.
                        2.6     The Accounts Payable Clerk should also ensure that there is proof of delivery or 
                                satisfactory performance evidenced on each invoice processed, and that the prices 
                                quoted on the invoices are in agreement with those stated on the purchase order.
                        2.7     The Accounts Payable Clerk should check the cast and extensions of the invoice. This 
                                need only be done on a test basis and should concentrate particularly on manually 
                                prepared invoices.
                        2.8     If the price, quantity and quality are as specified on the purchase order, the invoice can 
                                be set up as a payment voucher and processed for payment.
                        2.9     The invoice should then be stamped and initialled as evidence of the checking performed
                                and should be approved for payment by the Hotel Accountant.  The stamp should also 
                                bear the general ledger coding reference.
                        2.10    Once all the entries have been verified as correct, the Accounts Payable Clerk will update
                                the general ledger.
                        2.11    Deliveries to the Hotel received without invoices should be filed in a GRWI file, 
                                alphabetically by supplier name. Invoices should be filed alphabetically in an unpaid 
                                invoice file.
                        2.12    Some suppliers will not deliver invoices with the goods, and will send them by mail some 
                                time later.  When these invoices are received, the Accounts Payable Clerk should match 
                                the invoice to the delivery note and update the Goods Receipt Without Invoice.
                                                         YOUR HOTEL FOOTER
                                                      YOUR HOTEL HEADER
                        Subject                            Payment Control                         Page: 3 of 7
                       2.13   The Hotel will also receive invoices related to other types of purchases not processed 
                              through the inventory systems such as service contracts, professional fees, etc. 
                              Verification will be carried out as noted in paragraphs 2.1 and 2.5, and the invoices 
                              should then be posted into the system in batches using a pre-calculated batch control 
                              total.
                       2.14   In the event that there is a problem with any invoice because of a discrepancy or missing 
                              approvals, the invoice should still be entered into the system so that the potential liability 
                              can be recognised.  The invoice should be put “On Hold” until the discrepancy is cleared.
                       2.15   All Update Reports and General Ledger Transmits should be filed immediately after 
                              printing, and the sequence of the page numbers should be confirmed to ensure none are 
                              missing.
                       2.16   At this time the Hotel has a liability which is un-discharged. This liability will remain un-
                              discharged until the payment to the supplier is completed.
               3.      VERIFICATION OF INVOICES
                       3.1    The value of the Goods Received Without Invoiced and Invoices to be Paid files should 
                              balance to the control account in the general ledger if all postings have been updated.
                       3.2        After invoices have been posted to the sub-ledger they should be verified.  
                              This means checking that invoices have been:
                                  a)  posted to the correct supplier account;
                                  b)  posted in the correct amount;
                                  c)  posted to the correct expense (general ledger) code;
                                  d)  posted with the correct invoice reference.
                       3.3    The verification of whether the invoice has been posted to the correct expense code (3.2 
                              d.) should be performed by a senior member of the accounting office staff, such as the 
                              Head of Accounts or Financial Controller, as they should be able to identify that the 
                              coding is correct.  Once the verification is complete, the invoice should be initialled and 
                              stamped “Ready for Payment”
                       3.4    The other verification points should be carried out on each posted batch so that the 
                              details can be easily checked, and corrected if necessary. Each General Ledger Transmit
                              Report should also be reviewed for rejected entries.
                                                      YOUR HOTEL FOOTER
                                                         YOUR HOTEL HEADER
                         Subject                               Payment Control                          Page: 4 of 7
                4.      MONTH END PROCEDURES
                        4.1     At the end of every month there will be items where a completed voucher set (i.e. 
                                purchase order, delivery note and invoice) will not have been processed, but for which a 
                                liability exists. This can arise in two ways. 
                        4.2     First because goods have been received but there is no invoice.  Provided that the 
                                Accounts Payable Clerk ensures that all delivery notes for the period have been updated 
                                in the system, then the liability will have been properly recognised in the Goods Received
                                Without Invoice control account.
                        4.3     Second, there may be an order outstanding for the performance of a service which may 
                                have been rendered, but which the accounts payable has not been notified about by the 
                                department head concerned. At the end of each month therefore the Hotel Accountant 
                                should review the files of outstanding purchase orders.  Where it can be shown that a 
                                service has been performed and there is a liability the Hotel Accountant should prepare a 
                                listing of these for use as a journal entry.
                        4.4     The list should reflect the expected charge and the expense code allocation for each item
                                included. This accrual list should be posted into the General Ledger debiting the expense
                                codes and crediting an accrued liability account.  At the next month end the accrual must 
                                be reversed and then replaced with a new accrual listing as necessary.  
                        4.5     The Accounts Payable Clerk should print the month end Supplier Report, the Outstanding
                                Payable report, and the Ageing Report, for review by the Financial Controller. The Goods 
                                Received without Invoice Report should be reviewed on a monthly basis by the Financial 
                                Controller to ensure that long outstanding items are properly investigated and cleared. 
                        4.6     The accounts payable control account must be reconciled on a monthly basis to the 
                                Outstanding Payable Report.
                6.      PAYMENT PREPARATION AND PROCESSING 
                        6.1     The decision as to when accounts should be paid depends on the credit terms of the 
                                supplier and the cash flow position of the Hotel and requires the input of the Financial 
                                Controller.  It is a requirement that the Hotel take a minimum of 45 days’ credit, and it is 
                                recommended that payments are issued in the last week of the month following the 
                                month in which the invoice was received. Exceptions would require prior approved of the 
                                General Manager.
                        6.2     To make this decision the Financial Controller should be provided with a system 
                                generated aged analysis of the Creditors Sub-ledger. The aged analysis should be 
                                compiled from the voucher bags which make up the Creditor Sub-ledger and should 
                                                         YOUR HOTEL FOOTER