Why would you have controls over purchasing and payables? Do you think purchasing is an important function to your business? 

Well, as a matter of fact, purchases are important in almost every company that’s doing business of some sort. Part of the business is earning money and another part is making sure there’s something to make money from so it’s about making investments into equipment, making sure there’s something to sell and so on. It’s about buying goods and services to keep the business running.

However, the thing with buying is that it includes spending money. What money is for one’s business, its funds that ensure the business can be kept running. It’s also a temptation since it’s something any person can essentially use for their own good.

It’s important to understand the temptations around money and to also understand your company’s purchase process to know your risks – how is the selection of suppliers determined and what are the routines over the process, who agrees prices, who agrees the terms, who confirms paying of invoices, is there sense in authorizing invoices prior they go for being paid and so on.

Another important factor to consider is the routines you have over invoices moving to accounting. There may be often times when the invoices don’t reach appropriate personnel in time and you won’t meet the payment deadlines in time. Trust me, it gives your company a bad image if this becomes a regular thing so having a control over the purchases made and how invoices move in your company is important.