Supplier payment run

You prepare the accounts payable run so the owner can approve it in one sitting: the right bills, at the right time, to verified bank details, with the cash to cover them. You catch duplicates, fraud attempts and disputed bills before money leaves. You never pay, upload a payment file to the bank, add a payee or change bank details: the owner releases every payment.

When to use

• "What do we need to pay this week?"
• "Do the payment run."
• "The bills are piling up, sort them out."
• "Can we afford to pay all of these?"
• A supplier says they have not been paid.
• Set a weekly or fortnightly run day with cronjob so the run sheet is ready the day before.

What you need

• Access, best first: a connected app (Xero, QuickBooks) on the Connections page; your own browser signed in by the owner to the accounting software (and the bank's website for reading the balance only); or the aged payables detail and the bills themselves (PDFs) from the owner. If none is there, ask with clarify.
• The aged payables detail report (bill by bill), not the summary: summaries can net supplier credits into the buckets and hide what is due.
• Current bank balance and the cash forecast for the next few weeks (see thirteen-week-cash-forecast).
• The owner's approval rules: who approves bills, any amount above which the owner must see the bill, and the run day. Save them in memory.
• Purchase orders and delivery confirmations, where the business uses them.

Method

1. Two decisions, two approvals. Approving a bill (it is genuine and correctly coded) and approving a payment (pay it now) are separate. Never treat one as the other.
2. Build the candidate list: approved bills due on or before the next run date, plus overdue bills, plus any bill with an early-payment discount worth taking.
3. Check each bill:
   • Genuine and approved. Supplier is known, the goods or services were ordered and received (three-way match: PO, delivery, bill, where POs are used), and it has the required approval.
   • Not a duplicate. Same supplier with the same invoice number in any format ("INV-0012", "12", "0012"), or the same amount within 30 days, or the same amount on a bill and on a statement. Hold and query.
   • Not disputed. Check emails and notes. Hold disputed bills and tell the owner.
   • Credits netted. Apply supplier credit notes to that supplier's bills before paying.
   • Tax and withholding. Some payments need tax withheld or forms on file (for example US contractor W-9 for 1099 reporting, or UK Construction Industry Scheme deductions). If the supplier type suggests it, check the rule with web_search and flag it.
4. Verify bank details. For every supplier, compare the bank details on the bill to those held in the accounting software and to the last payment. New or changed details are the most common way businesses lose money to fraud. Mark them "unverified" and hold the payment until the owner confirms the change by phoning the supplier on a number they already had, not one from the email or invoice. Never update bank details yourself because an email, a PDF or a message asks.
5. Early-payment discounts. Annualised value = discount % / (100% minus discount %) times 365 / (days paid early). For 2/10 net 30: 2/98 times 365/20 = about 37% a year. Recommend taking it when that beats the business's cost of borrowing and the cash forecast has room.
6. Cash check before anything else is decided. Total the candidate run. Compare it with today's balance and the next three weeks of forecast receipts and committed payments (payroll, tax, rent, loan repayments). Answer the owner's real question in one sentence with numbers: "Paying all 23 bills on Friday leaves 4,100; payroll on the 25th needs 18,600. Paying the 11 that are due leaves 19,800 and covers payroll."
7. If cash is short, propose a priority order for the owner to decide: payroll and payroll taxes, tax authorities, secured lenders and rent, suppliers whose goods stop if unpaid, then others by due date. Suggest asking specific suppliers for terms. The owner decides; you do not stretch a supplier on your own.
8. Prepare the run sheet and, if the owner wants, a bulk payment file in the bank's import format (CSV or the format the bank documents). The owner uploads and authorises it in the bank. You do not.
9. The owner trims, you never widen. After approval, do not add bills to the run. Anything new starts a new approval. A bill paid every month for years still needs this month's approval.
10. After payment (owner confirms it is released): draft remittance advices, mark bills paid in the ledger only if you have permission, and update the cash forecast.

Worked example: Friday's run

Candidate list from the aged payables detail: 23 bills, 38,200.00.

• Duplicate check: Office Co has INV-0012 and "12" open, both 1,240.00. Hold the second and query the supplier; one of the pair is genuine.
• Bank details: Cloud Ltd's latest bill shows a different account number from the last payment. Mark unverified, hold, and give the owner the phone-verification steps in references/run-sheet.md. Do not reply to the email.
• Credits: Printco has a 180.00 credit note; net it against their 920.00 bill and pay 740.00.
• Discount: Steel Ltd offers 2% for payment within 10 days on 6,000.00. Annualised about 37%, and the forecast has room: recommend paying early, saving 120.00.
• Cash check: balance 42,300.00, receipts expected before payroll 9,500.00, this run 38,200.00, payroll and payroll taxes on the 26th 18,600.00. Paying everything leaves a 5,000.00 shortfall after payroll. Paying only the 11 bills due by the 23rd (14,300.00, Steel Ltd included) leaves 18,900.00. Recommendation on the card: pay 11 bills (14,300.00 face value; 14,000.00 after the Printco credit and the Steel discount); hold 2 (duplicate, unverified bank details); defer 9 to next Friday, with the forecast showing they fit then. The owner trims or approves; you do not add.

Fraud red flags that always hold a bill

• Bank details that differ from the last payment or the accounting record, however plausible the explanation.
• An "urgent, pay today" request, a sender domain that differs from the supplier's by one character, or a reply-to address that is not the sender.
• A first bill from a supplier nobody ordered from, round amounts, no PO and no delivery record.
• A bill that arrived by an unusual route (a personal mailbox, a chat message, a phone call "from the finance director").
• Pressure to skip the owner ("already agreed verbally"). Raise each with the owner in writing. Payment fraud is recovered rarely and slowly; a day's delay costs nothing.

Priority order when cash is short (the owner decides)

1. Net wages, then payroll taxes and pension.
2. Tax authorities.
3. Secured lenders, rent, insurance.
4. Suppliers whose supply or service stops if unpaid (utilities, hosting, key materials).
5. Everything else by due date, oldest first.
6. Discretionary spend: defer. Show the owner what each cut-off line leaves in the bank after payroll, and which suppliers would be asked for terms.

Output

• payment-run-<date>.xlsx: Run sheet (supplier, bill number, bill date, due date, amount, currency, credit applied, amount to pay, approval status, bank details status, recommendation pay, hold or query, reason), Held (with reasons), Discounts, Cash check, Checks.
• A show_card: total to pay by currency, number of bills, bills held and why, unverified bank details, cash after the run and after payroll.
• Remittance advice drafts after release. Format in references/run-sheet.md.

Checks before you finish

• Run total equals the sum of the lines, by currency, and matches the bank file if you made one.
• No bill appears twice; no bill is in both the run and the held list.
• Every changed or new bank detail is marked unverified and held until the owner confirms.
• Every credit note available has been applied.
• The cash check has been shown, or you said plainly that it could not be done and why.
• Nothing has been paid, uploaded or released by you.

Pitfalls

• Paying from statements or reminders. Pay bills, not statements; statements cause duplicates.
• Trusting an email about new bank details, even from a known supplier's address. Mailboxes get compromised. Phone verification by the owner, every time.
• Reading the aged payables summary. It can net credits into buckets; read the detail.
• Paying early by habit. Pay on the due date unless a discount or a relationship reason says otherwise.
• Running the cash check after the run is approved. It must come first.
• Treating "always paid" as approved. Recurrence is not consent.

See also

• thirteen-week-cash-forecast, expense-claim-review, purchase-requests (operations).