AP Related Question 2201

  • Is it okay to…
    Recieve an invoice from a vendor and log that invoice of course against that vendor account…but when paying the invoice…you actually pay to a third party vendor?
    What are the tracking requirements for this systems wise???

  • Can you clarify your question? It seems that you are asking ‘If Pepsi bills me and I set up the payable to Pepsi, can I pay Coca-Cola?’ Is that your question? If it is, then the answer should be that it is wrong to do so. All vendors should be paid just as they bill you. This is not necessarily a SOX issue, but rather a legal issue. You need to pay the legal entity that invoices you for goods/services.

  • You example is exactly what I am talking about. I have a client we are implementing a system for and they do this. I can’t understand why…or even HOW they are doing this today and getting away with it. It seems really odd to me. How does the vendor (Pepsi) in this case account that the invoice was paid by me? Then…is there really proof on my side that I paid that invoice??? The payment is set to Coca-cola. ???

  • In some situations the system may permit you specify 2 vendors: one for receive the product, another for payment. This is used when you have 3-side (triangle) operation, where one side delivery the product, other side collect deposit and your side, that receives the good and make the payment.
    You live in England and order a 7up from Pepsi Co. US. As you know, Pepsi has a unit in France, and they deliver direct to you. You may receive a invoice from the two companies, but only the Pepsi US should be paid.

  • Another scenario would be where you get invoiced from a vendor but you pay to a 3rd party finance company as the debt is factored, or you pay to an administrator.
    So ultimately it can be possible but you would have to ask in the specific case whether it makes sense and I would expect to see a strong audit trail of documentation to support this.

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