Thursday, June 5, 2014

How do you avoid accounting process mistakes? How about a checklist?

By Steve Endow

A customer purchased some software from me recently, and decided to pay with a credit card.  I processed the credit card transaction last week and all was well.

But today I received a check in the mail from the same customer.  The check was for the invoice that the customer had already paid by credit card.

It seems that someone forgot to record the credit card payment, causing the invoice to get picked up in the weekly AP check run.  Once I realized that it was a duplicate payment, I contacted my customer to let them know.

But, what if the check had gone to a very large vendor who automatically cashes all checks?  Presumably, hopefully, the extra payment would end up as a credit on the customer's account.  At some point, someone would probably learn of the credit balance.

But imagine if I weren't an honest vendor and just shrugged and deposited the check?  Would anyone ever notice the duplicate payment?  Would a reconciliation of the credit card transactions catch such a mistake?

People make mistakes and occasionally forget to do things, even in accounting departments. So how do you catch such mistakes?

A few years ago, while reconciling my own bank accounts, I noticed that I forgot to record some cash receipts in my accounting system.  I had received and deposited the check, but simply forgot to record the receipt and deposit transactions.  Not a huge mistake, but it makes things mighty confusing when you are trying to reconcile.  And I did it more than once, so clearly it was something I needed to fix.

In my case, I went low tech.  If you have ever read Atul Gawande's books or articles, you may be familiar with The Checklist Manifesto.  When you need to do things right, sometimes all you need is a simple physical checklist.

I went online and found a site where I could order a custom ink stamp.  I designed my stamp, ordered it, and a few days later I was stamping all of the checks that came in the mail.  It works fantastic.  And because the stamp is associated with receiving money, I love using it!


I note the date I received the check, the date I scanned it, entered it, and deposited it.  Normally I do everything on the same day, but sometimes I am busy and may take a few days to scan or enter or deposit the check.  With this stamp it's easy to see if I have forgotten a step or not completed some of the steps.  The check doesn't leave my desk until all of the steps are completed.  Super low tech, no batteries, and pretty much idiot proof.

Such stamps are pretty common--I got the idea for mine from seeing accounting departments at my customers.

Perhaps my customer needs a stamp for their AP invoices with steps that has steps to track when an invoice is paid via credit card, and has a subsequent step of recording such manual AP payments in Dynamics GP?  Custom stamps are cheap, while mistakes in the accounting department can be expensive.

Are there other common accounting process mistakes that you have seen?

Would a checklist help employees avoid such mistakes?


Steve Endow is a Dynamics GP Certified Trainer and Dynamics GP Certified IT Professional in Los Angeles.  He is also the owner of Precipio Services, which provides Dynamics GP integrations, customizations, and automation solutions.

You can also find him on Google+ and Twitter


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