Purchases

This standard governs purchases in the accounting system of All About Pawz, LLC: the buy side of the books: what the business owes its suppliers, when it is due, and what was paid. The sale side of the Platform is heavily automated; the buy side is where the Accounting Operator does the most manual work, because supplier invoices arrive as documents in an inbox, not as system notices. The Accounting Manager approves bill payments and owns the payables aging review.

The two supplier realities

The Platform sells from two suppliers: PetDropshipper and CJ Dropshipping: and the buy side differs for each. Dropship supplier obligations are typically settled per order: the Company pays the wholesale cost when the customer order is placed. That money moves as order-level payments, not as supplier bills. The payables procedure below governs obligations that do run as bills: wholesale invoices, freight bills, service vendors, rent, and utilities. When dropship settlement moves onto billed terms, such as a monthly supplier statement, those statements enter here.

The pricing rule ties the buy side to the sell side: the displayed price is supplier cost multiplied by 1.55 plus shipping, computed once when the product is written. The supplier cost is the buy-side fact the whole pricing model rests on. Where a supplier's cost changes and the stored price does not, margin erodes silently. The Accounting Operator's buy-side duty includes flagging cost changes that should trigger repricing: the books know what was paid, and the catalog needs to hear about it. See Sales.

Bills

A bill is the supplier's invoice entered as a payable: bill number, vendor, bill date and due date, lines with quantities, unit prices, and expense accounts, tax, total, amount paid, and state.

1. Enter bills when they arrive, not when they are paid. A bill entered on arrival is a liability the aging can see; a bill entered at payment time is a surprise.
2. The bill date is the invoice date, not the entry date. Dating the entry to the invoice keeps the expense in the right period.
3. The due date drives the payables aging, so it is entered from the invoice, not from memory.
4. Each bill line carries the expense account it posts to. As with invoice lines on the sell side, this is what makes the Profit & Loss right: a freight bill coded to cost of goods sold and a freight bill coded to shipping expense tell different stories about margin. Code deliberately.

New vendors.

1. Set up the vendor record before the first bill: legal name, remit-to address, payment terms, and tax identifier where required.
2. Guard against duplicates by tax identifier, not by name: names vary, tax identifiers do not. A bill entered against a misspelled or duplicate vendor splits the payables history and corrupts year-end information reporting, under Taxes.

Paying bills

1. Record each payment with its amount, method, date, and reference: the check number or transfer confirmation, the thing the vendor will cite when they say they did not receive it.
2. Payments apply to bills through payment applications, which support partial application: a payment against part of a bill leaves the balance owing and a clear application record.
3. A bill shall never be marked paid without a payment record. The paid mark is a statement of fact, and the payment record is the proof.

The payables aging is the buy-side counterpart of the receivables aging: what the Company owes, to whom, and when. The Accounting Operator works it weekly. A vendor paid late twice starts adding late fees; a vendor paid late habitually starts shipping late.

Purchase orders

Where the business uses purchase orders, the order is the commitment and the bill is the fulfilment.

1. Convert the purchase order to a bill when the goods arrive and the supplier invoices. The conversion carries the lines across, so the bill can be matched against what was ordered and what was received.
2. Match all three: order, receipt, and bill. A bill for goods never ordered is either a duplicate invoice or fraud, and the purchase order is what allows the operator to tell the difference.

The month-end buy-side checklist

1. All bills for the period entered: check the inbox, not only the system. A bill nobody entered is a liability nobody sees.
2. All payments applied to their bills.
3. The payables aging agrees with the payables control account. Where the detail and the books disagree, find the bill that posted to the wrong account before closing.
4. Accrue what arrived without a bill: goods received but not yet invoiced are still a liability at month-end. Post an accrual entry: expense debited, accrued payables credited: and reverse it in the following month when the bill arrives, so the period stays honest.

Failure modes

1. A vendor says unpaid; the books say paid. The payment record's reference decides: check number, transfer confirmation, date. Where the reference is real, the vendor mislaid it: send the proof. Where the reference is missing or vague, the payment may never have happened; verify with the bank before paying again.
2. Duplicate bill. The same supplier invoice entered twice, usually once from the emailed copy and once from the paper copy. Match on vendor and bill number before entering, every time. A duplicate bill paid twice is cash out the door that takes months to recover.
3. Bill paid, expense in the wrong period. The bill date drives the period, not the entry date. A December invoice entered in January with a January date overstates January expense and understates December. Correct the bill date: or accrue at close: rather than moving the entry.
4. Supplier cost changed, price did not. When a supplier invoice shows a cost increase on a product the Platform sells, the operator flags it for repricing. The pricing rule is cost multiplied by 1.55 plus shipping; where cost moved and the stored price did not, every sale since has been at the old margin. This is the Accounting Operator's most valuable buy-side habit.

Controls

• Separation of duties: the person who enters a bill does not approve its payment, and the person who records a payment does not reconcile the bank account it left, under Banking.
• No bill is paid twice: the vendor-and-bill-number match in the failure modes above is a control, performed before entry, not a courtesy.
• Banking credentials used to make vendor payments are never shared and never recorded in a bill, a payment record, or any other document.
• Bills are never deleted to correct them. A wrong bill is reversed or credited on the record, so the payables history stays complete, under Books.

Records created and where they are kept

Bill records and their lines, vendor records, payment records and payment applications, purchase orders and their conversions, and accrual entries are kept in the accounting system and retained under the Regulatory Record Retention Policy.

Escalation

A bill for goods never ordered, a suspected duplicate payment, or a vendor dispute over payment goes to the Accounting Manager the same day. Suspected supplier fraud and legal process go to legal@aapawz.com. System failures in bill entry or conversion go to support@aapawz.com.

Review cadence

The Accounting Operator works the payables aging weekly and completes the buy-side checklist at each month-end close. The Accounting Manager reviews vendor records for duplicates quarterly and reviews this standard annually.