Finance and accounting software: the process, flow by flow

Drafts an invoice from the delivered quantities on the signed delivery order, at the prices on the sales order.

• Quantity per line is the quantity delivered on this DO line, less anything already invoiced against it.
• Price comes from the sales order line, which carries the price approved on the quote; a price list change made after the order was confirmed does not reach it.
• The order's delivery charge goes on the first invoice for the order, once.
• Payment terms come from the customer record, and the due date counts from the invoice date.

Applies a GST code to each line from the customer and the item.

• Lines are standard-rated at 9% unless the order is marked for export and the export document is attached.
• Zero-rated lines show GST at 0% on the invoice.
• GST is worked out on the total of the standard-rated lines and rounded to the cent, so the GST shown is 9% of the taxable total on that invoice.

Checks that the invoice carries the tax invoice details before it can be issued.

• Required: the words Tax Invoice, the invoice number and date, Harbourline's name, address and GST registration number, the customer's name and address, a description of each line, the GST rate, the total before GST, the GST amount and the total with GST.
• A missing customer address blocks the invoice and goes back to the sales admin to fix on the customer record.
• The invoice number is assigned at issue, so a cancelled draft leaves no gap in the sequence.

Reviews the day's draft invoices and issues them as one batch.

• Exceptions are listed first: a price edited by hand, a line with no sales order behind it, or a delivered DO more than 3 days old with no invoice.
• IRAS expects a tax invoice to a GST-registered customer within 30 days of the time of supply, which for most sales is the earlier of the invoice being issued and payment being received. The 3-day flag on delivered orders is Harbourline's own tighter rule.

Posts each issued invoice to receivables, sales and output GST, and emails it to the customer with the signed DO attached.

• The receivables balance used for credit checks updates at posting, before the next order is confirmed.

Books returned goods on a return note, recording the quantity and condition of each item.

• Restockable items go back to stock; damaged items go to a write-off under the inventory approval rules.

Drafts a credit note from the return note, or from a price correction the sales manager has confirmed, referencing the original invoice.

• The credited quantity cannot exceed the quantity on the original invoice line, less earlier credits.
• The credit uses the original invoice's price and GST rate.
• It shows the number and date of the original tax invoice, the quantity and amount credited, the GST credited and the total credited.

Approves the credit note before it is issued and posted.

Reads the invoice and extracts the supplier, invoice number and date, PO reference, lines, GST and total.

• The supplier is identified by GST registration number first, then by the sending address; one that matches neither goes to a person.
• Lines plus GST must add up to the invoice total; if they do not, the draft is flagged as a possible read error for a person to check against the PDF.

Checks the invoice against earlier bills from the same supplier for a duplicate, before any matching.

• Same supplier and same invoice number, after removing spaces, dashes and leading zeros.
• Same supplier, same total and an invoice date within 7 days of an earlier bill.
• Drafts, held bills and rejected bills are searched as well as posted ones.
• Any hit holds the invoice, with the earlier bill shown beside it.

Matches each invoice line to a PO line and to the goods received on that line that are not yet billed.

• The PO must be open and raised to the same supplier.
• Billable quantity is the quantity on goods receipts for the line, less the quantity already billed.
• The invoiced price is compared with the PO line price after any discount on the PO.

Applies the tolerances and sets a match result for each line.

• Quantity: no tolerance on counted items, so any quantity above the billable quantity is a difference.
• Price: differences across the whole invoice up to S$20.00 before GST count as a match; above S$20.00 the bill is held.
• A price below the PO is taken at the invoice price and noted on the bill.

Checks the GST and the tax invoice details.

• GST is accepted only if the GST registration number on the invoice agrees with the supplier record.
• GST on the standard-rated lines must equal 9% of those lines, within S$0.05 for rounding.
• An invoice without the tax invoice details is held so finance can ask the supplier for a proper tax invoice before input tax is claimed.

Codes the bill and sets the due date.

• Stock lines go to the goods-received-not-invoiced account that the goods receipt credited; non-stock lines go to the account and cost centre on the PO line.
• The due date is the invoice date plus the supplier's payment terms.
• An account outside the agent's allowed list sends the bill to a person for coding.

Approves or rejects the bill with the invoice, PO and goods receipt side by side.

• Matched bills up to S$10,000.00 including GST: finance executive. Above S$10,000.00: finance manager.
• Any bill with a price or quantity difference: finance manager, whatever the amount.
• The agent cannot approve its own exceptions, and posting a bill always waits for a person.

Posts the approved bill to payables and input GST, and logs who drafted it, who approved it and what changed.

• Price differences within tolerance post to a purchase price variance account, so accepted overcharges show in the month's figures.

Proposes the run from approved bills due on or before the next run date.

• Bills due up to and including the following Thursday are included, so nothing falls overdue between runs.
• Held bills, disputed bills and suppliers on payment hold are left out, each with its reason shown.
• Open supplier credit notes are netted against the same supplier's bills.

Checks each payee's bank details against the details last paid.

• A supplier whose bank details changed in the last 30 days is left out until a second person confirms the change by calling the supplier on a number already on file.
• A bill already in an earlier run that has not cleared the bank is left out.

Reviews the proposal, defers or part-pays bills, and submits the run.

• The run total is shown against the bank balance at the last statement and the receipts expected before the run date.
• The preparer is recorded on the run.

Approves the run.

• The approver cannot be the person who prepared the run.
• Any change after approval, even removing one bill, sends the run back for approval.

Produces the payment file in the bank's bulk payment format, or a payment list where the bank takes no file upload.

• The file total and the number of payments must equal the approved run.
• The file is generated once per approval, and the generation is logged.

Uploads the file to the bank portal, where Harbourline's bank signatories authorise it under the bank's own controls.

• The system holds no bank login and cannot release a payment.

Marks the bills as sent, then as paid once the bank debit is matched in the bank reconciliation.

Sends each supplier a remittance advice listing the bills and credit notes the payment covers.

• Remittance advices are drafted per supplier from the run. They are messages to suppliers, so a person sends them.

Builds the ageing from posted invoices, credit notes and receipts matched up to the latest bank statement.

• The check runs after the 07:00 bank import, so the previous day's receipts are in.
• Unallocated receipts and unused credit notes are netted per customer before any invoice is called overdue.
• Buckets count days past the due date: current, 1 to 30, 31 to 60, 61 to 90, and over 90.

Drafts one reminder per customer with overdue invoices, with a statement of account attached.

• Skipped: invoices marked disputed, customers on the excluded list, customers with a promise to pay whose date has not passed, and customers reminded in the last 7 days.
• The stage and its wording come from the oldest overdue invoice: friendly at 7 days, firm at 30, final at 60 for trade accounts.
• Accounts in their first 6 months get the friendly reminder at 3 days.
• An overdue balance above S$15,000.00 goes to the finance manager's call list instead of a reminder.

Reviews the batch, edits or holds any reminder, and approves the rest to send.

• Each draft shows the invoices, days overdue, last contact and any promise to pay.
• Nothing is sent until the credit controller approves it.

Sends the approved reminders from Harbourline's accounts mailbox and records each one on the customer record.

Logs promises to pay from calls and replies, with the date and amount promised.

• A promise pauses reminders for that customer until the promised date.
• If no matching receipt is posted by the day after the promised date, the collections agent drafts the next stage.

Checks each new sales order against the customer's credit limit before it can be confirmed.

• Exposure is open invoices, plus delivered but not invoiced, plus confirmed orders not yet delivered, plus this order.
• Exposure above the limit blocks confirmation and sends the order to the finance manager.
• Any invoice more than 60 days overdue flags the account for a hold decision. The collections agent can suggest a hold but cannot place one.

Releases the order, places the account on hold, or changes the credit limit, with a note giving the reason.

• Holds and limit changes are made only by a person, and each is logged.

Imports the statement and checks it is complete.

• The opening balance must equal the previous statement's closing balance; a gap stops matching until the missing statement is loaded.
• A line with the same date, amount and reference as one already imported is rejected as a repeat.

Runs the matching rules in a fixed order and stops at the first rule that fits each line.

• Rule 1: a payment run reference, matched to the run total, or to each payment where the bank lists them separately.
• Rule 2: an invoice number in the reference, with an amount equal to that invoice's open balance.
• Rule 3: the payer's name matches a customer, and the amount equals exactly one of that customer's open invoices.
• Rule 4: the amount equals the sum of 2 to 5 of that customer's open invoices, and only one combination fits.
• Rule 5: recurring lines such as bank charges and interest, matched by description to a set account.

Clears rule 1 and rule 2 matches, creating the receipts against the invoices.

• Only these exact matches clear on their own, and the finance executive can reverse any of them.

Confirms or rejects the rule 3, 4 and 5 proposals in one batch.

Identifies the remaining receipts with the customer, from remittance advices or a call.

• An unidentified receipt is held as unallocated cash. It is never put against the oldest invoice of a customer it might belong to.

Creates and codes an entry for each bank line with nothing behind it, such as a direct debit.

Produces the reconciliation: bank closing balance, less payments not yet presented, plus receipts not yet credited, against the ledger's bank balance.

• The day is marked reconciled only when the difference is S$0.00.
• Ledger items with no bank line after 10 business days are listed for follow-up.

Reviews and signs the month-end reconciliation for each bank account.

Runs the cut-off reports for the month just ended.

• Goods received on or before the last day with no bill are listed at PO value before GST. Stock lines are already in the goods-received-not-invoiced account from the goods receipt, so they are not accrued again; the non-stock lines on the list are the accrual proposal.
• Delivery orders signed on or before the last day with no invoice are listed. With invoices raised from signed DOs each day this list should be empty, so anything on it is a stopped invoice.

Completes the bank reconciliation for every account to the last day of the month.

Prepares accruals and prepayments from the cut-off reports and the recurring schedule.

• Accruals carry no GST; the GST comes in with the supplier's tax invoice.
• Accruals reverse on the first day of the next month, so the real bill replaces them.
• Manual journals go to the financial controller for approval.

Ties each sub-ledger to its control account.

• Aged receivables total equals the receivables control account; aged payables total equals the payables control account.
• The goods-received-not-invoiced listing equals its account, and the stock valuation equals the inventory account.
• Control accounts take no manual journals, so a difference is usually a timing item. Any difference is listed by document, and the close does not move on until it is explained.

Reviews the close checklist and locks the month.

• Each checklist item has a preparer and a reviewer recorded.
• Once locked, nothing posts into the month. Reopening it needs the financial controller and is logged with the reason.

Prepares the GST return figures for the period from the posted documents.

• Output tax is the sum of the GST on each invoice and credit note dated in the period. IRAS asks for it to be tracked separately, not worked out from the standard-rated sales total.
• Taxable purchases come from bill values before GST, not grossed up from the input tax figure.
• Input tax comes only from approved bills whose supplier GST number agrees with the supplier record. Bills on GST codes the accountant marked as not claimable are left out.
• Every figure opens to the documents behind it.

Reviews the figures with Harbourline's accountant and files the GST F5 return with IRAS by the due date, one month after the period ends.

Records the filed figures against the period and locks its GST.

• A document later found to belong to a filed period is not posted back into it. It is listed for the accountant to decide how the correction is made.