Setting up procedures can cut the costs of your credit card bills
In a time when cash flow is tight and more companies are searching for better prices. A large number of my clients are purchasing far more off the the Internet . In some cases they are now purchasing more on their credit cards to get better deals then they are through the creditors ledger.
But for some reason many people let the purchasing procedure go out the window.
Just because you order it on the internet, this does not mean you should not do a purchase order.
We spend a lot of time completing bank reconciliations and I now think we now must integrate this same and strict procedure for the credit card statement, you would not let items go through your bank twice but yet this happens quite a lot with credit cards.
I have set up a procedure using sage with my clients who purchase heavily using the company credit card, and I hope it may be of use to other sage users. I am aware that fuel is purchased through credits cards, but for other purchases here are some recommendations.
Some of my clients have been delighted by the savings they have made with their credit cards
Credit Card Procedure :
- inform all users of the company credit card that they must have Purchase order and Authorisation before any purchases are done on the company credit card . Exactly the same as you would have done for your creditors ledger.
- Create a purchase order
- The purchaser should then give the invoice to the accounts department and should be entered into your purchase ledger
- This will provide you with a more accurate Profit and Loss, Balance sheet and cashflow information
- When the statement comes in you can now reference the items .
- Instead of entering your credit cards using the bank payment , you will now do a purchase payment using the 1240 and the reference in the ref box just like a cheque number instead of the 1200 account and allocate the payment to the the right receipt or invoice. If you order quite a lot off one internet company, there is the potential for the credit card company to take 2 payments which very often happens .
- You can now mark your purchase order as complete.
- Then enter anything that cannot be done by the above using the bank payment.
- when the direct debit comes out of your 1200 current account you can use the bank transfer option to transfer the payment in to your 1240 bank account.
- Like with your bank rec , you can give it a statement reference and reconcile on the date your payment came out to Zero
- You are now ready for when the next statement comes in , and you can always view your PDF statements if you need to in view history within the Bank Rec window .
I am aware in the real world that bits and pieces are purchased on credit cards, but the company credit card is not for personal use. Almost everyone these days has their own credit and Debit card, my experience is that when people do this they are well aware, and are hoping that the company does not have procedures set up to check.
You would not let any one use your business bank account in that way. Hence why I think it is must that you reconcile your monthly credit card statement. In my experience the cards are either not enter correctly, and one of the reasons I am given is they do not have a receipt, or they have just enter it anyway, but that does not been the bank is not going to take the direct debit.
I am very interested in other people views and sage hot tips regarding credit card purchases or any other general functionality.
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