Document No SOP/FIN/ 01

Revision No 01
STANDARD OPERATING PROCEDURE
Title Issue Date
STANDARD OPERATING PROCEDURES FOR PAYABLES

1. PURPOSE: to provide a method and set up a process for payables to the vendors at Novus
Green Energy Systems Pvt. Ltd and also to ensure timely and smooth payments process. This
policy ensures the accounts payables are properly identified, recorded, and accounted in the
books of account and other related issues.

2. SCOPE: This procedure applies to all vendor payments, and payments like employee
reimbursements etc, which are to be settled on a regular basis. Purchases manager,
Accountant and Finance manager are responsible for accurate and timely payment of all
invoices for a given period. Inquiries from vendors regarding the status of unpaid invoices
are generally handled by Purchases department.

3. POLICY & PROCEDURE:

Vendor Payments

a. Vendor bills are to be entered in vendor SOA on a regular basis.

b. Vendor Statement of accounts are to be maintained and submitted to the

management at head office on a biweekly basis.

c. Finance department should ensure a proper price negotiation and agreement with

vendors as per the vendor selection procedure

d. Accountant and the Finance manager must ensure that the credit period given by

the vendor is properly utilized

e. Accountant must ensure that there is no duplication in the bills produced by the

vendors.

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 f. Accountant must also ensure the pricing in the invoices match with the price quoted

by the vendor in his quotation or agreement (if any)

g. All the vendor bills are to be cleared twice a month, and the bills are to be cleared by

cheque.

h. Physical copies of bills are to be sorted vendor-wise and month-wise as mentioned

in the Document Storage Policy.

i. Accountant must submit the vendor bills to the head office by 17th of every month to
clear the dues for the period of 1st to 15th of every month by 20th of every month
j. Accountant must submit the vendor bills to the head office by 2nd of every month to
clear the dues for the period of 16th to end of every month by 5th of every month
k. A 3 way match is to be performed with regards to the quantity of items billed,
before preparing and sending the vendor SOA to the head office.
l. The quantity in the invoice is to be matched with the purchase order (if any),
delivery note or inward register and the invoice sent by the vendor.
m. The invoices which do not match are not recorded until the differences are resolved.
It becomes the responsibility of the Purchase department to ensure the finance
department gets proper information for smooth process
n. There shall be a standard naming convention to create supplier names in the vendor
master file (Vendor Coding) to avoid multiple records for same supplier
o. Occasionally cheques may be lost, stolen or incorrect which requires a stop payment
and reissue of the cheque. Accountant is responsible for issuing a replacement
cheque.
p. Departments requiring a stop payment on an operating/accounts payable, cheque
should contact the head office immediately upon realizing a cheque is lost or stolen.
q. Accountant is also responsible for maintaining the cheque cancellation function.
r. If a cheque must be canceled due to an inaccurate amount, an incorrect vendor
name, or an incorrect address and a replacement is not needed, the cheque must be
sent to head office with a note indicating the cheque must be canceled.

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Employee Reimbursements or Advances

a. All the employee reimbursements are processed twice a month

b. Accountant must
a. ensure that employees are reimbursed for legitimate business related expenses
in timely and accurate manner
b. ensure that the expenses claimed have proper approvals from their reporting
managers
c. ensure that the employee is eligible for claiming the respective expense
c. In case of reimbursements, employees must submit the supporting bills or documents
for the amount claimed along with respective authorization forms duly signed by the
respective Reporting managers.
d. In case of advances for travel and lodging, employees must submit the breakup of
expenses to be incurred mentioning the period for which the advance is requested,
along with respective authorization forms duly signed by the respective Reporting
managers
e. In case of salary advances, an authorization mail from the Reporting manager and the
Finance manager is required
f. A log must be maintained by the admin department, for the number of kilo meters
travelled by the company vehicles and the same has to be submitted by the employee
while claiming the reimbursement. Admin manager should keep a check on the mileage
of the vehicles on a regular basis

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E-payment process

If the payments are made electronically, Finance department should follow the below guidelines

a. There must be a Preparer, Initiator and Approver for the below payments
b. In some cases, Preparer and Initiator can be same.
c. Preparer, following the above guidelines mentioned for Vendor payments and Employee
reimbursements/advances, must prepare and present a statement to the Finance
manager for the approval
d. Finance manager reviews the statement and presents it to the authorized personnel for
the approval.
e. After the approval of authorized signatory, Initiator initiates the bank payments to the
respective bank accounts.
f. Approver takes the responsibility of checking the initiated amounts in bank and
approves the payments. While approving the payments, the approver must ensure
a. Amounts are raised to the correct bank accounts
b. Amounts match with the statement submitted for approval
g. Approver after the approval process, sends out a mail confirmation that the payments
are approved, along with the payment reference numbers (transaction IDs provided by
the bank)
h. Approver responsibility can be divided between 2 persons to make it convenient for the
authorized signatory. Finance Head can take the responsibility of checking the correct
account numbers and can give a GO signal to the authorized signatory through a mail.
i. Finance manager must maintain the vendor master which has banking information of
the vendors for payment purposes

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