Accounts payable mistakes that experienced operators still make

Payables mistakes cost cash, which makes them different from most bookkeeping errors. A misclassified expense makes a report wrong. A duplicate payment makes the bank balance wrong, and getting the money back depends on somebody else agreeing to send it.

Nine of them are below, ordered roughly by how much they cost when they happen. Each carries the entry that produced it and the correction. All amounts are invented.

What to take away

1. Paying a changed bank account without verifying it

An email arrives from a supplier's address saying their bank details have changed. The record is updated and the next payment goes to the new account.

Cost: the full payment, usually unrecoverable. Correction is prevention, and it is one sentence: any change to bank details is confirmed by calling a number you already held, and the call is logged beside the change. The gate structure this belongs to is in the accounts payable overview.

2. Paying the same invoice twice

The invoice arrives by email and again attached to a statement or a reminder, and is entered both times with the same number and amount.

Cost: the invoice value, recoverable only if the supplier agrees. Correction: a duplicate check on supplier and invoice number before an entry saves, plus a review of the payment run for the same supplier appearing twice. Reverse the duplicate entry when found: cost down, payable down.

3. Paying from the statement rather than from invoices

A supplier statement showing a balance is paid in full without agreeing it to the ledger first.

Cost: whatever is on their statement and not on yours, including invoices you never received and charges you would have disputed. Correction: reconcile first, pay second. The statement is a document to check against, never an instruction.

4. One supplier set up twice

The same supplier exists as two records under slightly different names, with invoices and payments spread across both.

Cost: usually time, occasionally an overpayment when both balances get settled. Correction: merge the records and keep the older one, then check the payment history across both. Prevention is a warning at creation when a new supplier resembles an existing one.

5. Recording an invoice when it is keyed rather than when the goods arrived

Costs land in whichever month somebody got round to entering the paperwork.

Cost: no cash, but every monthly report is wrong in both directions. Correction: date the entry to when the goods or service arrived, and count what is sitting unentered at each month end.

Whether that rule applies to your books depends on the method they are kept under, which the federal guide to accounting periods and methods sets out. This is the cut-off failure the expense recording guide describes in full.

6. Deposits and prepayments treated as costs

Money paid to a supplier in advance, or a deposit on equipment, charged straight to an expense account.

Cost: profit understated now and overstated later, and an asset missing from the balance sheet. Correction: hold it as an amount due from the supplier or as a prepayment, and release it when the goods arrive or the period it covers passes.

7. Credit notes that never get applied

A credit note is entered but left floating against the supplier rather than matched to the invoice it relates to.

Cost: the invoice keeps showing as fully owed and gets paid in full, while the credit sits unused. Correction: apply credits to specific invoices at entry, and review any unapplied credit older than a month.

8. Journals posted straight to the payables control account

An adjustment posted directly to the control account rather than through a supplier.

Cost: the supplier ledger and the balance sheet stop agreeing, and there is then no way to say which is right. Correction: restrict who can post to control accounts, and agree the ledger total to the control account every month end without exception.

9. Approving on an amount alone

An approver taps approve because the amount and the supplier name look plausible, with no confirmation that anything arrived.

Cost: recurring charges for services nobody uses, and occasional invoices for something never delivered. Neither has a document trail, while the records a business is expected to keep include evidence a cost was incurred.

Correction: the approval question is not "does this look right" but "did this arrive". For recurring services, review the whole list once a year and cancel what nobody can justify.

The habit that prevents most of them

Five checks, under two hours a month once the first pass is done, and they belong in the closing routine described in the bookkeeping foundations guide.

Common questions