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Do you make copies of vendor checks for the files?

Stewart Linder's Profile

We use a three-part check. Two parts go to the vendor, check, one stub, and the second stub we keep. There is not a lot of information on the stub so during my career I have the accounts payable department make a copy of the full check and then attach the copy to the invoice for filing. This way an auditor can see the “original” check. Please let me know what your policies and procedures are. Thanks, Stewart

Answers

Chris Shumate
Title: Accounting Manager
Company: Dominion Development Group, LLC
LinkedIn Profile
(Accounting Manager, Dominion Development Group, LLC) |

Stewart - I don't see a need to keep copies of the checks on file. Ninety-nine percent of banks offer online banking with check imaging. If there's ever a dispute about payment, or if the audit wants to see the face of the check, it can be printed off the bank's website. I think it's creating an extra step for A/P that isn't necessary. But that's just my opinion.

We likewise use the three-part check like you outline in your question.

Topic Expert
Aaron Codak
Title: Client Services Finance manager, North A..
Company: Kantar Finance Services (Shared Service ..
LinkedIn Profile
(Client Services Finance manager, North Americ, Kantar Finance Services (Shared Service Center)) |

No, we do not - all of this information is available in our ERP system should the auditors require it - and when they do ask for this information, they are typically asking for a copy or confirmation of the cleared check as well - which our banking team will extract from our banking portal.

Stewart Linder
Title: Global Controller
Company: AxiomSL
(Global Controller, AxiomSL) |

Thank you Chris and Aaron for your responses.

(Agent, JKS Solutions, Inc.) |

I've been in AP for nearly 20 years and have only once had an auditor request to see a copy of a check. It was a much easier to request the copy from the online banking platform than all the time it takes to copy each check and file it with the paid invoice. Depending on the software you use, all information about the check can be readily available in your ERP. Copying and filing are one of those things that add no value and add cost. I much prefer environments where everything is stored electronically.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Surprising no one said this, but maybe its time for new software (upgrade, modification, etc.). All the information about a check should be on the stub.

Proformative courses by Wayne Spivak:

Before You Buy That Accounting, ERP, or CRM System...
https://www.proformative.com/courses/accounting-system-gap-analysis-training-course

War Stories - Enterprise System Implementation Wars
https://www.proformative.com/courses/war-stories-enterprise-system-implementation-wars

Anonymous
(Controller) |

I keep the stub, but only because I was told to keep it. It gets tossed in a pile and is never to get looked at. It is by no means filed and we have had plenty of other means for getting check information when needed.

Sara Laidlaw
Title: President
Company: Accounting Services Bureau Inc
LinkedIn Profile
(President, Accounting Services Bureau Inc) |

Yes, but only for QuickBooks checks.

Due to the "un-do-ability" of the QuickBooks database, this is the best way to document exactly how a check payee was filled out and the address/memo. Every list in QuickBooks has an underlying code that rides with the name record, which enables the user to edit the name and other fields without a problem. This edit is then retroactive to the beginning of time when pulling reports. Editing vendor names may be necessary and a great when we are doing file design and cleanups but preferably only with a small closely held companies with controls in place. Any list changes can be found in the audit trail, but that is a pain. The #1-way people try to hide embezzling in QuickBooks is to change the vendor name on the check in the system.

I don't want to debate the pros/cons of a $175 program, but this is one control that can be inserted in the A/P procedures with little difficulty. Check runs are best scanned or copied before distribution. Period.

Using the bank to find check images is an important topic.
Our area is hot with DOL audits. They want to see canceled checks, from two years ago. Do your clients have them? BOA is the only bank we have found that offers all the images when the statements are downloaded. Suntrust? Print only! And only on the first mailed copy, and not 3rd party copies. Most banks let us go back 6 - 18m online for statements but are ALL the images available if the client failed to obtain them for their files?. What if the audit is passed the available date range? What is the wait time and cost of paying the bank to get records? Do you want someone to sit at a screen and click and save every check image?

Every business needs at least an electronic copy of all canceled checks, preferably 6 or so on a page. Do your clients a favor and be proactive in this area.

Al Gil
Title: NA
Company: not applicable
(NA, not applicable) |

FWIW, our Suntrust account provides scanned copies of every check with the bank statement and we do keep those.

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Hi Stewart
My response here is perhaps unconventional for many USA businesses... so I make it with as much tact and diplomacy that the written word displays:)

Why are you still paying by check in the 21st century?
Why not move every vendor to ACH payments asap?*

Hopefully your ERP system is modern enough that it support generating a NACHA format file you can upload to the bank's ACH portal page (or if volumes and payment frequencies are high, you can integrate this).

Then you can :
1. save time and money on printing checks, mailing and filing copies
2. save time on bank recs and unpresented checks follow up
3. deploy staff to more valuable tasks
4. introduce stronger oversight on vendor accounts and changes to their banking information (to reduce payments fraud)
5. save audit fees by preventing them from needless tasks.

For vendors who may want to stay with checks, pay them once a month and then charge a $50 paper handling fee. Be wary of vendors who don't want ACH deposits-they may not be declaring all their earnings:)

Hope that helps!
Len

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Len -

You need to tell the banks to stop charging excessively for bits and bytes, but next to nothing for paper checks.... And if you really don't write that many checks, it is hard to justify the fees.

This is a major reason people don't ACH here.

Make no bones about it, I agree wholeheartedly that ACH saves tremendous amounts of time.

As an example, my little consulting firm writes about 10 checks a month. To ACH it is a minimum of $75, plus a per ACH fee and probably others to change my computer platform so I could ACH directly from my computer (as opposed to going to the bank).

Absurd - and this is a major bank!

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Wayne
I agree on scale-if your volumes are low, the payback may not be there.
It's a question of doing your own calculation and looking at all related costs/tasks.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

There are also other factors from a customer/vendor perspective that needs to be understood.

If you do a lot of business with a customer or vendor (I'll use vendor for now on, less letters to type), that vendor needs to know what you are paying with your check.

So you still need to produce some type of check stub and either mail or e-mail it. The information needs to be complete to ease the application of the check by the receiving party, otherwise you've just substituted one set of problems for another.

In addition, many times the verbiage that is transferred to the receiving party by the bank(s) is incomplete, changed or the amount is different than the origination amount (FX issues).

Some of the issues relate whether you are paying your vendor for one invoice or 100.

Needless to say, using ACH/Wire saves a tree and other expenses, but done improperly it isn't saving your payee that much time.

Diana McDonough
Title: Founder and President
Company: BridgeView CFO Solutions, LLC
(Founder and President, BridgeView CFO Solutions, LLC) |

Integrating payments through an online solution such as Bill.com resolves all of these issues for me.

We can pay by ACH, the preferred solution, efficiently and inexpensively. We can also pay by check in which case the cancelled check is saved with the electronic copy of the voucher with all backup and approvals. We're paying bills for dozens of firms this way and find our processing time is dramatically reduced, saving time and money that easily covers the monthly service fees.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Does the monthly fee include the added bank fees? If not, does it still save you money?

Thanks

=========================================================
Proformative courses by Wayne Spivak:

- Before You Buy That Accounting, ERP, or CRM System...
- War Stories - Enterprise System Implementation Wars
- Business Process Mapping: A Prelude to System & Process GAP Analysis
- GAP Analysis: A Practical Approach

https://www.proformative.com/sitesearch?type=Courses&op=Search&keywords=wayne+spivak

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

We save a copy of the check stub but it's because the checks come three part. However we also pay the bank to see the copy. We do this because all of the admin team works remotely and owner travels a lot. For us it is an easy method for him to confirm each check written is valid.

Mike Haile
Title: Founder
Company: Haile Consulting Solutions
(Founder, Haile Consulting Solutions) |

Thanks all for this insight.

I'm from the UK where the use of checks is so rare that many vendors will not accept checks as a form a payment. The interesting thing is that a lot of this was driven by the banks who preferred to manage transactions electronically.

If you think about it
- It costs the banks money to print the checks and send them to their clients

- It costs them more in administration to process checks

- There are costs associated with checks "lost in the mail" and "bounced" checks

- There is a possible cost of fraud errors etc (or the management thereof)

I'm therefore very surprised to see that the banks in the US discourage electronic payments by charging more. At least I now understand why our US companies also use checks

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Mike,

I dealt with many European vendors (in an industry where there was a "testy" scale). When they got out of hand I sent them checks instead of wires.

They always went nuts because they truly had no idea how to handle them.

They would claim we hadn't paid and I would claim they got our check... Needless to say many became less "testy" after the second or third check.

Ross Anderson, CPA, MBA
Title: Controller
Company: TFS Capital
(Controller, TFS Capital) |

Wires are expensive, but ACH payments are not bad if you do enough volume. I have advocated for implementing ACH but the issue that we have is that we hardly have enough volume to make it worth it financially and many vendors do not take ACH but always take a check. I would love to pay more by credit card and ACH when I can get everyone comfortable and convinced that it's time to change.

Stewart Linder
Title: Global Controller
Company: AxiomSL
(Global Controller, AxiomSL) |

Thank you for your responses and help with my question. Sara, we do use QuickBooks and this is why I liked to make the copies, but we have now stopped doing this.

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