Vendor payment run dates

Rosalyn

Hi, I have recently started in a new role as purchase ledger superviser and one of the duties I oversee is supplier payment runs. These are done weekly but I was surprised to discover that only invoices due for payment on the run date were picked up, I would have imagined that invoices due up until the next payment run should be included, otherwise they would be overdue? My old employer ran daily pay runs but even then, payments would include any invoices due by the time the payment hit the suppliers bank. Is there a general ruling around this?
Thanks in advance.

Cheesypeesy

That does sound odd, I would expect the same as you. Perhaps the system needs configuring to pick up those invoices?

Rosalyn

It’s a manual process, the systems prompts you for a date which you want invoices included for, I did challenge this with the finance manager but was told this is how it should be done or we would not be utilizing the full 30 days credit terms for all invoices, I still don’t know if this is right or not? To me it means that we are always having invoices up to a week overdue, I will question this again, but wanted to find some official guidelines first, not found anything yet though which made me think I may be wrong?

Cheesypeesy

Perhaps the finance manager is willing to allow some invoices to go a few days overdue if it means not paying other invoices early? They may be trying to improve the company's cash flow position?

I imagine they're aware of the risks of delaying payment, but feels the benefits of maximising their credit terms (sometimes slightly beyond them) is worth the risk. In any case, I wouldn't push it too much given that you've only recently started.

Rosalyn

Thanks Cheesypeesy,
I think your right, I though it would be a cash flow issue, I will keep my opinions to myself as the newby, for now anyway ;-)

Thank you for your feedback.