What Is a Check Run in Accounting and How Does It Work?

A check run in accounting is a systematic process for managing a business’s outgoing payments. It streamlines the disbursement of funds to vendors, suppliers, and other payees. This organized approach helps ensure financial obligations are met efficiently and accurately. A check run serves as a centralized mechanism for a business to handle numerous payments simultaneously.

Understanding a Check Run

A check run involves processing and issuing multiple payments in a single, scheduled batch. Businesses adopt this method to consolidate payment activities, rather than issuing individual payments as invoices become due. This batch processing is why it is called a “run.”

The primary function of a check run occurs within the accounts payable department. It aims to achieve efficiency in payment processing, allowing businesses to manage cash flow and maintain supplier relationships. While historically associated with physical checks, the term now also encompasses electronic payment processes.

Essential Elements for a Check Run

Before initiating a check run, several pieces of information and documentation must be prepared. Approved invoices form the foundation, confirming expenses are authorized and validated by departmental heads. This approval process ensures the legitimacy and accuracy of charges.

Accurate vendor information is necessary, including payment terms and, for electronic transfers, banking details. Businesses must ensure sufficient funds are available in the designated bank account. Each expense requires proper general ledger coding for accurate financial reporting. Payment schedules and due dates are reviewed to prioritize invoices and avoid late fees, which helps maintain vendor relationships.

Executing the Check Run Process

Once preparatory elements are in place, a check run begins with selecting invoices for payment. This selection is based on due dates, payment terms, and prior approvals, often managed within accounting software. The system then generates payments, which can involve printing physical checks or initiating electronic transfers such as Automated Clearing House (ACH) transactions.

Following payment generation, a review and approval phase occurs. Designated management or authorized personnel examine payments against supporting documentation to confirm accuracy and prevent errors or fraud. After approval, payments are distributed, either by mailing physical checks or confirming electronic transfers. Finally, payments are recorded in the accounting system, updating the general ledger and accounts payable records to reflect reduced liabilities.

Accounting Controls within a Check Run

Accounting controls ensure the integrity and security of a check run. Segregation of duties means different individuals are responsible for invoice approval, payment generation, and payment distribution. This separation minimizes the risk of fraud and errors by preventing any single person from controlling an entire transaction.

Regular reconciliation processes, such as comparing bank statements against accounting records, are performed after payments. This helps identify discrepancies and confirms transactions are accurately recorded. Documentation and clear audit trails are maintained for every payment, providing a verifiable record. Establishing authorization limits for payments ensures disbursements exceeding a certain threshold require higher approval, adding oversight to the financial process.