BG5 Making and recording payments


This unit is about dealing with documentation from suppliers and ordering and delivery documentation, preparing payments, recording expenditure in the appropriate records, and making payments relating to invoices, wages and salaries, and petty cash.

There are three elements:

BG5.1 Process documents relating to goods and services received

BG5.2 Prepare authorised payments

BG5.3 Make and record payments.

Users of this competence will need to ensure that practice reflects up to date information and policies.

Knowledge and Understanding

You need to apply:

Accounting methods

K1. double entry bookkeeping

K2. methods of coding data

K3. operation of manual and computerised accounting systems

K4. credit card procedures

K5. relationship between accounting system and ledger

K6. petty cash procedures: imprest and non imprest methods; analysis of items of expenditure including VAT charges

K7. payroll accounting procedures: accounting for gross pay, statutory and non‑statutory deductions and payments to external agencies; security and control; cumulative calculations

K8. methods of handling and storing money from a security aspect

K9. what is an audit trail

The business environment

K10. Types of business transactions and documents involved

K11. basic law relating to contract law, sale of goods act and document retention policies

K12. general principles of VAT

K13. types of discounts

K14. automated payments: CHAPS, BACS, Direct Debits; Standing Orders

K15. credit and debit cards

K16. different ordering systems: internet; fax; in writing; telephone

K17. documentation for payments

K18. basic law relating to data protection

K19. legal requirements relating to cheques, including crossings and endorsements

K20. the importance of maintaining accurate and comprehensive records and files for an audit trail

K21. the importance of obtaining signatures and authorisations from the relevant person

The organisation

K22. relevant understanding of the organisation's accounting systems and administrative systems and procedures

K23. the nature of the organisation's business transactions

K24. organisational procedures for authorisation and coding of purchase invoices and payments

K25. organisational procedures for filing source information.

Performance Criteria

You must ensure that:

1. you check suppliers' invoices and credit notes against delivery notes, ordering documentation and evidence that goods or services have been received

2. you check that totals and balances are correctly calculated on suppliers' invoices

3. available discounts are identified and deducted

4. you correctly enter documents as primary records according to organisational procedures

5. you code and record entries in the appropriate ledger

6. you either resolve identified discrepancies or refer to the appropriate person if outside own authority

7. you handle communications with suppliers regarding accounts politely and effectively.

You must ensure that:

1. you correctly calculate payments from relevant documentation

2. payments are scheduled and authorised by the appropriate person

3. you refer queries to the appropriate person

4. you maintain security and confidentiality according to organisational requirements.

You must ensure that:

1. you use the appropriate payment method in accordance with organisational procedures

2. you make payments in accordance with organisational processes and timescales

3. you enter payments into accounting records according to organisational procedures

4. you refer queries to the appropriate person

5. you maintain security and confidentiality according to organisational requirements.

Additional Information

This unit appears in the Accounting Standards as Unit 2. Although it has been tailored slightly for use in the substance misuse sector, it provides full credit transfer.
BG5 Making and recording payments
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