Functions and Structure of Accounts Payable Operations in Modern Business

Accounts Payable Department Operations streamline business processes rapidly and the changes happening around its trends are slowly helping businesses for getting ahead of the curve and adapt to changes accordingly. Taking a record of a company’s short-term liabilities, they can use this niche of accrual basis for maintaining smooth relations between vendors and suppliers. Representing a company’s balance sheet, as a snapshot of their financial health, accounts payable are the list of all typical payments within 30 days. This article is aimed at acknowledging businesses the functions and structure of Accounts payable Operations in business. Businesses must consider shifting roles within their organizations by aligning themselves with their financial management’s analytic and strategic goals. 

Responsible for accurately tracking whatever is owed to suppliers, ensuring proper approval and processing of payments, an ideal Accounts Payable Operation helps proper approval and processing payments. This can also be critical for maintaining accurate information and produce accurate balance sheets. 

Following are the Responsibilities for Accounts Payable Department: 

  • Processing and Payment of approved vendor invoices
  • Collection of W-9/ other tax identification information from suppliers
  • Processing and Payment of approved travel reimbursements or minor expense reimbursements that cannot be charged on business-p cards 
  • Preparation of financial reports related to accounts payable, accurate forecasting, and optimization of working capital
  • Maintenance of supplier/vendor relationships with accuracy and up-to-dateness by prompt, on-time payments and discounts. 
  • Prevention of Financial mistakes and frauds 

With structuring and restructuring of the overriding objective, companies can prevent fraud among the separation of duties, that comes under or outside of the accounts payable department structure. Segregating duties is critical for ensuring capable internal control, this approach will match responsibilities and roles in a way to suffice the accounts payable process workflow. Helping organizations in saving up business money and improving cash flow, also yields considerable time savings. Eliminating manual processing and limiting repetitive vendor inquiries about invoice payment dates, can swipe off inefficient workflow process bottlenecks. 

Attending to a varied spectrum of business nature and sizes, from small businesses to enterprise companies, the seamless integration of SaaS software applications helps businesses to scale up and down with their expanse of growth. OURS GLOBAL’s Accounts Payable Outsourcing services cater to the benefit of cutting-edge technology and skilled staff without the hassles of buying and maintenance of expensive software and implementation of industry best practices for eliminating discrepancies and achieving financial control and enhance profitability. 

Following are the Functions of Accounts Payable Operations in Modern Business:

1.Reviewing and Recording invoices

  • Organization and prioritization of invoices for payment
  • Code invoicing
  • Resolving of discrepancies
  • Reviewing of vendor statements
  • Processing of credit memos
  • Matching invoice, purchase orders & packing slip 

2.Route Invoices for Approval

  • Maintenance of controls by with invoices approved by a varied person than the one who pays for the invoice
  • Maintaneneca of time by quicker approval/processing of invoices
  • Documentation of all any issues

3.Remit Payment

  • Reviewing, coding, and processing of manual checks, wires, and ACH payments
  • Processing of recurring payments
  • Monitor manual check logs to help with month-end close

4.Report

  • Assisting in the production and analysis of monthly reports

Structure of Accounts Payable Process

  1. Starting with the AP clerk receiving the invoice, they manually enter the data and checks the invoice against the purchase order and relevant general ledger (GL) account. Routing the invoice towards approval, later these payments are scheduling against the invoice.
  2. With a proper understanding of double-entry bookkeeping and the concept of debits and credits, accounting teams can cut down on accounting errors by dual logging of financial transactions.
  3.  When receiving a bill, it will be credited in the accounts payable and debit as an asset account in the GL.
  4. Recording of Accounts payable on balance sheets as a summarized total of all accounts payable. 

Assets = Liabilities + Equity 

Following are the Ways of Organization of Accounts Department:

  • Appropriate documentation requires all purchase orders for goods and services. Maintaining a vendor master file, by combining all vendor information that has both W-9s and tax identification numbers.
  • Centralization of financial records by prompt entering of invoices into the system using the software. Processing of invoices alongside date stamps for recording all accounts payable in the journal and recording all such information in a unity place 
  • Reconciliation of day-to-day accounts confirming all invoices to match with the purchase orders, keeping track of all disputes and resolutions.
  •  Segregation of accounting duties for preventing errors and nullify common frauds. Assign varied professionals in charge of approval and processing of payments 
  •  Inclusion of electronic payments by automation of clearinghouse transfers encrypting payment data for assuring security and supporting companies for taking advantage of offers borne of expedited payments.
  • Application of electronic data interchange (EDI) for digital processes for saving time and ensuring accurate invoice processing. Helping to curb the advantage of discounts and favorable payment terms, businesses can apply supplier relationship management systems for procurement functions and automation of purchase orders, invoice approval & receipt. EDI also ensures better tracking and helps in getting paid for inventory and services rendered.
  • Automation of accounts payable process for helping businesses in saving time and money preventing costly error, reducing days payable outstanding (DPO).

Automation of Accounts Payable Operations in Improving AP Department Efficiency

Being time-consuming, paper-intensive finance and administrative function, Accounts Payable processes required to be automated or outsourced to an ideal service provider for attaining optimum efficiency. Digitizing the comprehensive process by making most invoices be processed without any kind of manual intervention, will save time and makes both the accounting processes and other core business processes to be much more accurate. Scanning or emailing to a specific address and verified by accounting automation software takes well advantage of supporting businesses on effective management of vendor lists, track bills and payables, and make payments without the requirement of entering detailed debits and credits. Routing the invoices to approvals as per rules and workflow built in the system. As payments in general ledgers are posted as an expense and these are automatically updated/deducted from the accounts payable. Storing these invoices into central databases will ensure regulatory and tax compliance producing a real-time picture of payables.

Automating accounts payable processes drive the effectiveness of embedded payment controls as a robust & repeatable process. Assigning varied roles for the development of separate login credentials and dashboards along with dual-factor authentication for logging in, drives up the hassle across forging of approvals and logging of all approvals into a single location for smooth auditing. Helping to match invoices to purchase orders and flagging anything that doesn’t match, Accounting proves to be more strategic for businesses, shifting to be viewed just as a financial center when the accounting department becomes capable of taking steps in achievement of greater accuracy. OURS GLOBAL’s Accounts Payable Outsourcing Solutions attends from invoice receipt, scanning, and processing to payment reconciliation, end-to-end accounts payable outsourcing services for streamlining payment projectiles with procure-to-pay operations, improving compliance, and quicken cycle times boosting value adds dynamic discounting & maximum batch payments. Businesses can contact us for quicker invoice processing assisting in forward of business insights by appropriate optimization of payment timing and supplier terms. 

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