Joanna A. van der Vant is currently in the accounting department at SOL Property Management, where she handles accounts payable, accounts receivable, budget, and more. In her years of commercial real estate and accounting experience, Joanna A. van der Vant has learned the importance of controls in accounting procedures, whether a company is small or large. Controls help a company stay in control of assets, says Joanna A. van der Vant. Below, Joanna A. van der Vant explains some of the most important controls in the areas of notes payable, revenues, and cost of goods sold.
Notes Payable is part of the acquisition of a new company. As Joanna A. van der Vant explains, this process is usually so closely guarded by the CFO that controls aren’t required, but there are still a few measures companies can take to safeguard the notes payable process.
The terms of all new borrowing agreements should require approval, Joanna A. van der Vant advises, paying particular attention to the interest rate and collateral. Borrowings and repayments should also require supervisory approval, Joanna A. van der Vant says, with large borrowings requiring the approval of the board of directors.
The most important factor in this category is the invoicing of shipments, according to Joanna A. van der Vant. Delays in this area can lead to a lag in revenue, which can lead to problems with a company’s liquidity, Joanna A. van der Vant adds.
For businesses, it’s important to have a shipping log that is regularly compared to the actual billings. Also, companies should ensure that any discounts a customer recorded on an invoice were authorized. Joanna A. van der Vant also advises that policies should be put in place requiring any samples sent to be logged in the shipping log.
Cost of Goods Sold
It can be easy to lose control over this part of the process because so many employees are often involved in the process. Joanna A. van der Vant recommends reviewing the estimate for a project and determining why they exceeded the anticipated cost, if applicable.
Joanna A. van der Vant stresses that all purchases should be preapproved, with purchases rejected that do not have this authorization. When items are received, they should be required to have a corresponding purchase order in order to be received. By controlling purchasing at every phase of the process, Joanna A. van der Vant has found that it’s far less likely that items can be ordered without following the proper protocols.
While some of these controls may seem complex, Joanna A. van der Vant emphasizes that having systems in place to prevent fraud can better ensure everything runs smoothly.