Recordkeeping

A new client wants to store A/P invoices and receipts by Vendor. In other words, create a file folder for ABC Accounting and chronologically store all invoices in that folder.

The big limitation is of course the number of vendors they might end up with, as well as those that might only have invoice per year.

My recommendation was to store invoices and receipts by date (really check reference within each date). Since they are using software to print checks, they should be able to easily reference a vendor's transaction list and go pull the needed invoice.

The client has in-house accountant who thinks I'm nuts.

What am I missing? I thought my advice was standard operating procedure since the invention of the G/L.

Have you ever had to go back and reconcile payments, POs, invoices for a vendor whose A/R department screwed up? I'm guessing the in-house accountant has. Your suggestion would make performing such a reconciliation really difficult.

Almost all my clients capture documentation by vendor by year. They pack up all the documentation each January and start a new hanging file. Then in April or so, they take the file boxes with prior year info to storage.

Have you ever had to go back and reconcile payments, POs, invoices for a vendor whose A/R department screwed up? I'm guessing the in-house accountant has. Your suggestion would make performing such a reconciliation really difficult.

Almost all my clients capture documentation by vendor by year. They pack up all the documentation each January and start a new hanging file. Then in April or so, they take the file boxes with prior year info to storage.

Thanks Cap, that's exactly why I asked. Wisdom from the other side of the table so to speak. I've been in public accounting my entire career and I've never had to reconcile anything more than a missing payment or invoice (or two). My system works well for that with a G/L or vendor transaction list in hand. I was just thinking of all the vendor files for those I pay once a year (or less) and the logistics of that, and figured a client would have many more than me (since I try not have many bills other than labor and software).

and figured a client would have many more than me (since I try not have many bills other than labor and software).

I agree with CaptCook. If you have 50-100 invoices a year like our small firms might, it doesn't really matter how you organize them because you won't feel the pain. When you have a lot more than that, it shows up.

If you've ever had to do a US census report where you have to compile how much electricity you've used, or if you've been in a sales & use tax audit, you appreciate having all of your similar invoices filed together.