Finance Management

Creditors

Creditor are third parties to whom the corporation owes money for supply of goods and services

Creditors management

Creditors management include

• Ordering

• Receipts of goods

• Payment for goods and services

Ordering Procedures

• Purchased requisition is raised and submitted to Chief Supplies Officer user department.

• The stores department fills the internal/ foreign purchase order submits it to Director General (DG) for approval

• Then Local Purchase order (LPO) is issued and approved by DG

• Original and duplicates copies are sent to the Supplier and another copy is maintained by the storekeeper

• While demanding payment the supplier raises the invoice together with the original LPO, Delivery note are also attached

Receipt of Goods

• All goods are purchased should be delivered to stores

• Goods will be checked as for quality and quantity

• Goods received note should be raised immediately on receipt

• Goods received note should be posted in the stored ledger and bin card

Payment of Goods

• With reference to the GRN the Creditors ledger with the amount of goods purchased

• With reference to the payment vouchers, the creditors ledger accounts will be debited with the amount paid

Debtors

These are customers to whom goods or services have been sold on credit

Receipt of Order

On receipt of order from the customer sales section opens the job order card cost estimates are calculated and be submitted to manufacturing section

On completion of the job, the invoice delivery note and copy of the customer's order

Accounting Procedures

• Invoices are raised to each customer

• debtor's ledger is opened for each customer

Debt collection procedures

• Debtors must settle their liabilities in due dates

• On receipt of money from customers the corporation official receipt is issued to each debtor

• The receipt is posted in the Debtors ledger to offset his outstanding

Provision for bad and doubtful debt

It is rare that all debtors will meet their obligation in due date for reason of bank repay or dealth

In this respect provision is made in the books of accounts as bad and doubtful debts

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