We occasionally hear variations of “How difficult can it be?” in reference to paying the bills in a school district. The accounts payable staff process invoices in excess of $80 million every work-day or $400 million every work-week on everything from pallets of copy paper to fuel for school buses. One significant financial management issue relating to the scale of cash disbursements has to do with optimizing the timing of cash payments. Late payments incur interest payments under the prompt payment act in the Texas Government Code, and in worse case scenarios certain vendors may refuse to do business with a school district. Early payments can significantly affect the district’s overall cash flow management, and in worse case scenarios this may result in short-term borrowing in certain months. Accordingly, accounts payable processes have far reaching implications affecting the overall financial management of a school district. Do controls over payments of accurately invoiced amounts also include:
- Paying obligations in time to qualify for available discounts and no later than the due date?
- Using sweep or zero-balance accounts through the district’s depository bank?
- Securing unused check stock?
- Applying safeguards to wire transfers including:
- Require additional authorization for all significant cash transfers by executive management outside of the accounting department?
- Use of electronically generated security codes to initiate cash transfers?
- Require confirmation by someone other than the initiator?
- Require bank call-back procedures?