Standard Operating Procedure (SOP)

Finance
Payments and Claims

Date Version Description Prepared by Reviewed by Approved by

1.0 Purpose

The purpose of this SOP is to set targets for the processing of payments and claims i.e.
travelling claims and reimbursements at each of the steps of the process in order to meet
deadline and to ensure proper internal controls are maintained. This SOP must be strictly
adhered except for urgent cases as per Management’s advice. Effective date of this SOP
is subject to approval date.

2.0 Scope

No Type of payment Baseline date Payment terms

Tax Invoice/ Invoice/ 30 days or as stated in the
1 Date of receipt
Credit Note (“CN”) Tax Invoice/ Invoice/ CN
Date of receipt of
Expense claims and
2 admissible expense 15 days
reimbursements
claim

3.0 Responsibilities

Roles Main
Preparer Account Clerk
Reviewer Finance Asst. Manager / Manager
Authoriser Director

Approval for each transaction is according to Limit of Authority.

Limits of Authority

Threshold Approver/Authorised signatories

<RM1,000,000.00 One (1) Director
>RM1,000,000.00 Two (2) Directors

4.0 Timeline and Flowchart

4.1 Payment timeline – working days

Day 1-3 Day 3-4 Day 5-6 Day 7-10

•  Receive Tax • Create • Pass printed • The Authoriser

Invoice/ transactions in payment approve all
Invoice/CN accounting vouchers and transactions in
Claim and system for the all documents the online
supporting complete and to the banking/
documents*. accurate Reviewer/ prepare
•  Check documents. Authoriser. checks.
accuracy and • Return • Input payment • All documents
completeness incomplete in online must be
of the and inaccurate banking/ returned to the
documents. documents to prepare preparer for
• Check vendors. checks filing.
expenses • The Reviewer
against and Authoriser
budget. must sign on
the payment
vouchers after
checking.

* Supporting documents include purchase order, acknowledgement slip, agreement,

claim form etc.

4.2 Flowchart

Send Tax Invoice/

Suppliers Invoice/ CN and
supporting documents

2.Request complete
1.Receive and check all Accurate & and accurate
Preparer documents and create complete? documents from
transactions in system. N
suppliers.
Y

N
3. Review payments
and claims. Proceed
Reviewer payment?

Y

5. Return documents 4. Authorise payment

to Finance for voucher and approve
Authoriser
updating accounting transactions in online
system and filing. banking/prepare
checks.

5.0 Procedure

Step Action Responsibility

1.0 1.1 Receive documents from supplier and check for accuracy
and completeness. The complete documents should
include;
1.1.1 Quotation
1.1.2 Purchase order
1.1.3 Delivery order
1.1.4 Claim forms
1.1.5 Tax Invoice/ Invoice
1.1.6 Debit and credit notes
1.1.7 Official receipts Executive
1.1.8 Supporting documents
1.2 If correct and complete, create transactions in accounting
system and online banking. Before proceeding to online
banking, priority of payment as follows;
1.2.1 Comply to payment term as stated on Tax
Invoice/ Invoice
1.2.2 Comply to payment term as stated in agreement
1.2.3 No payment term, the payment only will be made at
the discretion of Management.

1.3 If incorrect and incomplete, request supplier to reissue

the documents
1.4 If correction by full/partial credit note, attach it to the
invoice and create transaction in the system
DEADLINE: within 3 days of receipt
2.0 2.1 Incorrect and incomplete documents, request supplier to
reissue the documents and put as on-hold Preparer
DEADLINE: within 2 days of receipt
3.0 3.1 Review and check documents
3.2 If incorrect, go to STEP 2
3.3 If correct, sign on payment voucher Reviewer
3.4 Pass documents to Authoriser
DEADLINE: within 2 days of receipt
4.0 4.1 Review and check documents
4.2 If incorrect, go to STEP 2
4.3 If correct, sign on payment voucher Authoriser
4.4 Approve payment in online banking or prepare check
DEADLINE: within 3 days of receipt

6.0 Control Environment

6.1 General controls

• Performing variance analysis of all expenses accounts to check any

exceptions and discrepancies.
• Reviewing at least every year the control effectiveness and
updating/changing the controls.
• The Preparer should have no access to Company’s bank accounts or
online transfers authorisations.
• Mandatory rotation of account payable responsibilities after three years
and forced annual leave be instituted.

6.2 Information System and Technology

• Software and technology currently is being used to perform its day to day
procedures are effective.
• Validation and access controls are in place.
• Specific procedure for changing password on a periodic basis.

7.0 Record retention

All documents must be filed and must be in retention for seven (7) years in a safe place
for audit and regulators purposes i.e. GST and Company tax.