New Supplier Checklist

The Charlie’s Charter Services Financial Policy and Procedure Manual provides the policies and procedures for finance transactions within the business which must be followed by all staff. It also provides guidelines Charlie’s Charter Services will use to administer these policies, with the correct procedure to follow.

Charlie’s Charter Services will keep all financial policies current and relevant. From time to time it will be necessary to modify and amend some sections of the policies and procedures, or to add new procedures.  

Any suggestions, recommendations or feedback on the policies and procedures in this manual are welcome.

These policies and procedures apply to all employees.

Policy Number: FIN-1

Policy Date: 1^st January 2015

All finance transactions as noted in this policy are to be authorised by the noted authorised person prior to the transaction being undertaken.

This policy is to be read in conjunction with other specific finance policies where relevant.

Prior to any of the following finance transactions being undertaken, the authorising person noted must authorise the transaction.

Where additional policy is noted, this policy must also be adhered to when undertaking the finance transaction.

Finance Transaction	Authorised Person	Additional Policy
Bank Accounts	Chief Financial Officer	Bank Account Policy, FIN-2
Issuing Petty Cash	Bookkeeper	Petty Cash Policy, FIN-3
Business Credit Card	Chief Financial Officer	Use of Business Credit Card, FIN-4
Authorising New Customers	Bookkeeper	New Customer Policy, FIN-8
Authorising New Suppliers	Bookkeeper	New Supplier Policy, FIN-5
Purchasing Stock	Bookkeeper	Purchasing Policy, FIN-6
Purchasing Assets/ Equipment	Chief Financial Officer	Purchasing Assets and Equipment Policy, FIN-11
Debt Collection	Bookkeeper	Customer Debt Collection Policy, FIN-10
Payment of Invoices	Chief Financial Officer	Payments Policy, FIN-12
Preparation of financial reports: · Income Statement · Balance Sheet · Statement of cash flows	Chief Financial Officer	Accounting Principles and assumptions, BK-1

Policy Number: FIN-2

Policy Date: 1^st January 2015

This policy sets out the requirements for use of bank accounts, including opening, closing authorisation, variations to terms and conditions, reconciliation of bank accounts and bank account transactions.  

Opening Bank Accounts

Any new bank accounts to be opened for the business must have the authorisation of Chief Financial Officer.

For each new bank account opened, the financial system must be updated and the bank account registered by Bookkeeper.

Bank Account Authorisations 

For monies withdrawn from any bank account, whether by cheque, EFT or other online payment method, there must be two persons authorising for each payment.

The authorised persons for bank account payments are:

Chief Financial Officer

Bookkeeper

Each payment made must be supported by invoice, receipt or other appropriate documentation and the authorisations must be attached to this documentation prior to payment.

Any variations to banking arrangements can be made or varied by Chief Financial Officer.

Bookkeeper is responsible for updating the financial system and/or bank account register with the new information.Closing Bank Accounts

Where it is decided that a bank account is no longer necessary, Chief Financial Officer

 will authorise the closure of the bank account.

The Bookkeeper will then be required to complete the following:

• ensure all transactions with respect to the account (including cheques drawn) have been completed;
• lodge with the bank a letter, signed by two authorised signatories advising of the closure of the account;
• meet the bank’s requirements with respect to account closure; and
• update the financial system and bank account register.

End of Day Reconciliation of the POS system is to have 2 staff involved.  The Sales Manager to reconcile the day’s takings and the Accounts Clerk to review and perform the banking.

Financial Policy and Procedure

All deposits received must be banked within two days from receipt.

Deposit books are stored in the locked Finance filing cabinet.  Bookkeeper and Chief Financial Officer hold keys and are responsible to ensure this cabinet is locked at all times.

Credit Card payments are receipted and deposited same business day.

Unallocated direct deposits of more than one month will be investigated fully to determine source of deposit.  Where the source cannot be identified, the deposit will be allocated to Suspense account, to keep these funds separate and identifiable.

Cheques outstanding for more than twelve months will be reallocated back to the business through the financial system.

Where a payment stop on a cheque is required, this will be authorised by Chief Financial Officer.

Bookkeeper will be responsible for carrying out the following duties in regards to payment stop on a cheque:

• ensuring the cheque has not already been presented at the bank;
• getting authorisation to action the stop payment using appropriate forms from the bank;
• ensuring the bank receives notification of the stop payment notice;
• receiving confirmation of action from the bank of the stop payment; and
• ensuring the details of the stop payment are kept in the stop payment folder.

Policy Number: FIN-3

Policy Date: 1st January 2015

Petty cash should be used to pay for small business expenses up to $100 where payments through accounts payable or credit card are not justified or appropriate.

Erbal Remedies allows a Petty Cash Float of $200.

Petty cash vouchers must be completed before any cash is taken from the petty cash float.

Only up to $100 can be disbursed at any one time.

All petty cash vouchers issued must be approved by Bookkeeper.

Once the petty cash is spent, a receipt or invoice should be attached to the voucher and returned to petty cash with any balance of monies unspent.

All completed vouchers must have the following details included:

• Issue date of voucher;
• Name of person issued the voucher;
• Amount of monies disbursed;
• Details of expense;
• Invoice or receipt; and
• Signature of approval person,

Petty cash float is to be reconciled monthly. This is the responsibility of Bookkeeper.

All petty cash expenditure must be entered into the financial system once the petty cash has been reconciled.

The balance of monies and vouchers must equal the petty cash float amount before reimbursement can be made.

Reimbursement of petty cash will be authorised by Chief Financial Officer.

Policy Number: FIN-4

Policy Date: 1st January 2015

This policy provides guidelines for the issue and use of business credit cards.

An employee will only be issued a credit card once the Credit Card Authorisation Form has been completed.

The business credit card can only be used for travel, authorised entertainment and purchases of small value expenses or equipment up to the value of $ 500.

No cash advances are to be taken using the business credit card unless authorised by Chief Financial Officer.

Bank Account Policy

Where a business credit card is lost or stolen, then the owner of this card is to notify Bookkeeper who is responsible for notifying the issuing agency and ensuring the card is cancelled.

The use of the business credit card is not to be used for personal expenses.

All holders of business credit cards are required to reconcile the monthly credit card statement to the expense form, attach all receipts for payments made on the credit card and have the expense statement authorised by their manager.

Upon completion and authorisation of the monthly expense statement, these documents are to be forwarded to Bookkeeper for payment of the credit card statement.

All business credit cards are to be returned to the business when the person is requested to by Bookkeeper or where they are no longer an employee of the business.

Policy Number: FIN-5

Policy Date: 1st January 2015

All new suppliers to the business must be reviewed and accepted in accordance with this policy to ensure that the supplier service is aligned with the business objectives.

A new supplier must provide our business with quality product, great service, competitive pricing, and efficient delivery.

For each new supplier the following information table must be completed prior to agreeing services

The appointment of a new supplier will be authorised by Bookkeeper.

Accounts Clerk will enter all relevant details of the supplier into the financial system once approval is obtained from Bookkeeper.

Bookkeeper will review information entered into the financial system and independently verify the bank account or other payment details of the supplier to ensure payments made are to the correct supplier.

The purchasing department will be notified within one week of the new supplier being approved

All purchases from suppliers must be supported by a purchase order – refer to the Purchasing and Stock control policy

Payment terms for all suppliers must be reviewed by Bookkeeper at least once a year.  Following this review each supplier must be approached to seek improved payment terms by Bookkeeper.

All supplier payment terms must be a minimum of 14 days.

Any variation to the above must be authorised by Chief Financial Officer.

All supplier payments are to be reviewed at least once a quarter to ensure that payment terms are adhered to.  For payments made to any suppliers earlier or later than the agreed terms Bookkeeper will prepare a report that details the reasons why payment terms have not been adhered to.

Petty Cash Policy

This report will be reviewed and authorised by Chief Financial Officer.

Additional Policies for Suppliers

Purchasing Policy

Stock Control Policy

This policy provides guidelines for the purchase of goods, services, equipment and assets for the business.  

This policy is applicable for all purchases over $100.

Where items to be purchased are less than $100, then the petty cash policy is to be used.

All purchases for business items must be requested through a purchase order.  

All items over the value of $500 must be supplied by authorised suppliers – refer to the New Suppliers Policy where the supplier is not an existing supplier.

For items over the value of $1,000 three quotations must be provided.

A request for purchase must address the following criteria:

• Purchasing that promotes environmental sustainability;
• Value for money; and
• Preference to Australian/locally produced.

All purchase orders must be authorised within the following guidelines:

Items Purchased	Persons Authorised	Second Authorisation
Retail Stock	Bookkeeper	Sales Manager
Spare parts, components etc.	Bookkeeper	Spare Parts Manager
Equipment	Chief Financial Officer	Financial Accountant
Assets	Chief Financial Officer	Financial Accountant

All authorised purchase orders are to be copied and one distributed to accounts payable with estimated payment date and one to Bookkeeper who will check receipt of purchase against the purchase order when received.

All equipment and asset purchases must be entered in the financial system by Bookkeeper with the following details included:

• Date of purchase;
• Supplier; and
• Make, model, warranty/guarantee information.

All agreements for the provision of services to the business in excess of $500 are to abide by this policy.

All purchases received are to be checked against purchase order and noted as correctly supplied.

Once correct receipt has been recorded, this will be recorded on purchase order and forwarded to accounts payable for payment of purchase.

Petty Cash Policy

Use of Business Credit Card Policy

Stock Control Policy

This policy provides guidelines for monitoring and managing the amount of stock within the business to ensure that there are suitable levels of stock available to customers at all times.  This policy covers stock on board, stock in store, stock in storage, and stock in distribution centre.

It is the Stock Control Manager’s responsibility to ensure that all employees adhere to the stock control policy.

It is Stock Purchases Manger responsibility to:

• Identify core stock and ensure that appropriate levels are held at all times
• Monitor all stock levels and ‘stock turns’ (twice a year)
• For fast-moving stock negotiate with suppliers for ‘just in time’ deliveries where possible
• Regularly review sales budgets and order necessary stock in line with budgets
• Negotiate with suppliers for best price, quality, delivery methods and returns policy
• Order all stock required
• Maintain “preferred suppliers” list
• Keep up to date with customer and market trends and seek out new product for recommendation to the Stock Manager

Purchase of all stock must be authorised by Stock Control Manager and Bookkeeper.

All stock purchases must be requested by using a purchase order form and adhere to the purchasing policy.

When stock is received from the supplier, it is Stock Control Manger responsibility to:

• Review delivered items to delivery docket, including quantity, quality and completeness of order
• Match delivery docket to purchase order
• Follow up and ensure correct stock order will be received where there is a possible issue on delivery such as under/over-supply, damaged goods etc.
• Store the stock securely and in appropriate area
• Update all stock records for receipt of goods
• Inform Sales Manager of any under/over supply or damaged goods

It is Stock Control Manager’s responsibility to:

• Identify core stock and ensure that appropriate levels are held at all times
• Monitor all stock levels and stock turns
• Regularly review sales budgets and ensure that stock is ordered in line with budgets
• Understand each stock item – which items are the fast and slow moving stock
• Monitor re-order levels and ensure orders are placed in adequate time to reduce non-availability of core or necessary stock items
• Ensure that all stock items are priced in line with Pricing Policy and Mark-up Policy
• Ensure that all marked down and discontinued stock items are marked down in line with Discounting Stock Policy and Mark-downs Policy
• Meet weekly with Stock Purchases Manager and Sales Manager to co-ordinate stock purchases, review stock performance, sales performance and any other matters that should be addressed regularly in regards to monitoring stock
• Ensure that all staff are aware of new product, price changes and procedures for accurate recording of all stock movements
• Ensure that there are adequate controls (physical and administrative) in place to minimise theft and/or waste of all stock items
• Organise and oversee physical stock take twice a year and match records of stock take to administrative and financial records

It is all sales employees’ responsibility to:

• Identify core stock and ensure that appropriate levels are held at all times
• Raise purchase orders for low levels of stock
• Adhere to Mark-downs Policy, Discounting Stock Policy, Visual Display Policy
• Understand the importance of good stock control
• Keep up to date with stock pricing and new products
• Ensure that all stock records are kept accurately
• Ensure that all stock is securely stored to minimise theft and wastage

Purchasing Policy

Finance Authorisation Policy

New Supplier Policy

Pricing Policy

Mark-up Policy

Use of Business Credit Card Policy

Discounting Stock Policy

Mark-downs Policy

Visual Display Policy

Procedure Number: BK-2

Procedure Date: 1st January 2015

Purpose of the Procedure

This procedure lists the steps taken by and provides provides guidelines for Erbal Remedies in relation to the handling, recording, payment, reporting and storage of supplier invoices.

It is Bookkeeper responsibility to ensure that all employees adhere to the supplier payments Procedure.

Reconcile outstanding suppliers against supplier statements.

Check supplier credit notes have been received and entered.

Validate supplier ABN.

Confirm banking details for payment are correct.

Confirm supplier terms are as agreed.

Bookkeeper to email Chief Financial Officer the list of suppliers to pay.

Process supplier payments as per list.

Create bank supplier payment file.

Bookkeeper to gain authorisation from Chief Financial Officer to upload supplier bank file to process supplier payment.

If a cheque payment is to be made, follow the same process.  Bookkeeper to draw the cheque and Chief Financial Officer to provide 2^nd authorisation.

Email supplier remittances

Email Chief Financial Officer outstanding suppliers still to pay

Accounts clerk to file supplier invoices and related documents electronically on server for auditing purposes. H:FinanceSupplier InvoicesSupplier Name.  Documents are filed as Date (backwards), Doc No, Amount (no special characters or decimal points).  

For example:

H:FinanceSupplier InvoicesSupplier Name20150815 INV123 5500.

Each financial year the Finance drive will be archived, keeping the current financial year and the previous financial year.

All new customers to the business must be reviewed and accepted in accordance with this policy.  This policy is to be read together with  Customer Credit Limits Policy.

A new customer must support our business with good credit quality, and prompt payment history.

For each new customer the following information table must be completed prior to agreeing services

Business Name of Customer:

Location of Customer:

Products/Services required by customer:
( Attach a list if necessary)

Name of business owner/ sales representative:

How many years has the customer been trading?:

For each new customer being considered the following checklist must be completed

Have trade references been sourced for the new customer:
(Attach copies)

Has the customer been informed of the trade terms of payment terms e.g. 7 days from invoice and agreed to these terms? :

Has the new customer completed a credit application form? :
(Attach completed form)

Has the Personal Property Securities Register (PPSR) been reviewed?:

The appointment of a new customer will be authorised by Bookkeeper.

Each new customer will have a credit limit set.  This credit limit will be set in accordance with the Customer Credit Limits policy 

All new customers must be given the New Customer Letter, which must be signed and returned by the customer before any sales are to take place.

Accounts Clerk will enter all relevant details of the new customer into the financial system once approval is obtained from Bookkeeper.

Bookkeeper will review information entered into the financial system to ensure all information is correct.

The sales department will be notified within one week of the new customer being approved

All customer payment terms must be 7 days.

Where a customer has requested longer payment terms than the policy, this should be referred to and authorised by Chief Financial Officer.

All customer payments are to be reviewed once a quarter to ensure that payment terms are adhered to.  For payments made outside of the agreed terms Bookkeeper will prepare a report that details the reasons why payment terms have not been adhered to.

This report will be reviewed and authorised by Chief Financial Officer.

Customer Credit Limits Policy

Customer Debt Collection Policy

Customer Service Policy

This policy is to make sure a customer doesn’t get too far into debt with you without a payment plan being put into place or work stopped.

Reports on customer credit must be run every monthly.

When a credit limit is breached all relevant staff will be notified. This includes sales, distribution, accounts collection.

Any current outstanding orders should be stopped until the breach in the credit limit has been rectified.  All staff working on the order or sale e.g. sales, distribution, accounts collection for the customer should not carry out further work until authorised by Bookkeeper or accounts collection.

If the customer has a large number of orders outstanding or has increased the volume of orders since the last credit review, then a review of the credit limit must be undertaken.

This is the responsibility of Sales Manager.

If the credit limit needs to be increased, Chief Financial Officer must approve this.

Once this has been approved, all staff working on outstanding orders must be notified to restart the customer’s orders.

Bookkeeper must make a list of all outstanding payments.  

Bookkeeper must ring the customer and explain that further orders cannot be processed until the account has been paid.  Explain that a payment will need to be made before the next order can be processed.

If the customer is having difficulty, make a schedule of payments to bring them back in line with their credit limit.

Get the signoff of Chief Financial Officer before discussing this option with the customer.

Use the following script to assist with the call:

“Hi John, how are you?  Just thought I would give you a ring about your outstanding orders.  Unfortunately we have noticed that payments for previous sales have fallen behind on your account and these will need to be paid for before we can process the next set of orders.  Are you able to fix this up today so we can continue on your order?”

If they cannot pay on the day of the phone call, then get an expected payment date from them and confirm that any outstanding orders cannot start until the payment is made.  

If the customer has increased the volume or value of orders since the last credit review, the payment terms must also be reviewed by Bookkeeper.  

Where large orders are being placed then the payment terms should include deposit on order and/or progressive payments for each order.  This must be discussed and agreed with the Sales Manager and Bookkeeper.

This policy provides guidelines for the collection of late payments from customers.

An aging debtor report is to be run every week. All overdue customer payments are to be noted and the following procedures undertaken until recovery of outstanding amounts.  

Bookkeeper records each step in a collections table for the Chief Financial Officer’s perusal.

Bookkeeper stores the all ageing and collections reports in the locked Finance filing cabinet.

• First Contact:Once the payment is overdue phone or email the customer. Remind them that payment is due and has not been received. Ask them when they will be paying you and keep a record of the conversation or email. Remember to be nice, they may have forgotten or paid into the wrong bank account.  
• Overdue reminder:If they do not respond to the phone call or email, try contacting someone else in the business.  Let them know who you are trying to contact.  This often results in a return response from either the person you were trying to contact or someone else from the business.  Make a note of all conversation details on the overdue customer payment record.
• Final notice:When a payment is overdue for 45 days a final notice is to be sent either by phone or email.  A record of this notice must be entered onto the overdue customer payment record
• Direct contact:Where there has been no response to the final notice within 7 days then Sales Manager must either visit the customer or phone where previous contact has been by email.  The purpose of this step is to secure a date of payment.  A record of this notice must be entered onto the overdue customer payment record.

Formal letter of demand: Where payment remains outstanding 60 days and there has been an unsatisfactory response from the customer, authorisation from Chief Financial Officer for the formal letter of demand to be issued must be obtained.  Once authorised, this letter is to be sent via registered mail and a record of this notice must be entered onto the overdue customer payment record.

Debt collection agency: Where the amount outstanding is in excess of $300 and Chief Financial Officer has approved, a debt collection agency is to be appointed to recover the debt.

Write off debt: Customer payments that remain outstanding for 120 days are to be written off as bad debts and no further sales are to be undertaken with that customer without approval from Chief Financial Officer.

Using historical records and ageing reports, Erbal Remedies determines that 5% of accounts typically will not be collected.  This amount is reported on the Balance Sheet by Bookkeeper.

This policy provides guidelines for the application of various accounting assumptions and principles regarding the treatment of various transactions that impact the way they are recorded.  These assumptions and principles ensure that there is consistency within the Erbal Remedies accounting system, and also when compared to another so that the information is reliable.

All transactions must be recorded from the point of view of Erbal Remedies, which is regarded as a separate accounting entity from the owner, Charlie Morris. This means that the accounting system is designed to produce financial information only on the business.

Non-business (e.g. private) expenses paid from the business bank account will not be classified as business expenses.  Those payments will be recorded as Drawings. They represent a reduction in the owner’s equity in the business and will not be included in determining profit.

All transactions are initially recorded at cost. However, after initial recognition, the accounting standards sometimes divert from this principle.  For example, where an item of stock cannot be sold at or above cost price, it must be valued at its net realisable (net resale) value.

The costs of earning income (expenses) should be recorded in the same period as the income they helped to earn. The result is the profit (or loss) for the period.

Each transaction has at least two parts, and affects at least two accounts. For every debit there is an equal credit.

The life of Erbal Remedies can be divided into equal time periods for the purpose of determining profit. This is generally one year, but can be six months, a quarter or a month.

Erbal Remedies is assumed to have a continuing financial life. This means the entity will be able to realise its assets and discharge its liabilities in the normal course of business.

Internal controls over cash and the accounting system as a whole have the effect of minimising error and fraud.  As a result, the information generated from the accounting system can be relied upon.

The materiality principle recognises that all information need not be separately disclosed (reported) but may be grouped.  For example, reporting salary and wages expenses would be material but it would not be necessary to itemise salaries and wages into gross wages, overtime and allowances.

The conservatism principle recognises that when doubt exists for entries that require judgment or estimates, you should choose the option that would result in profit or assets being understated rather than overstated.

The consistency principle recognises that an accounting method, once adopted, should not be changed during an accounting period. Ideally, methods should only be changed at the beginning of a new accounting period.  Generally, a method is not changed unless there is a good reason for doing so.

The disclosure principle recognises that all relevant information should be communicated or disclosed to users.

The monetary convention assumes that all the transactions are recorded in the common monetary unit in use; for example, dollars and cents.  This enables many unlike items to be added together, and often transactions must be given a value before they can be recorded.