PAYMENTS PROCEDURE AND INVOICE MANAGEMENT
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Date
2019-07-23T10:16:11Z
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Abstract
The present report relates to an accounts payable process and more particularly to systems and techniques for automatically matching client specific vendor or purchase order information against invoices received from the client's vendors. Accounts Payable is a process employed by every business. In its simplest form Accounts Payable is the creation and distribution of a payment to settle an obligation (typically represented by an invoice) and the associated accounting entries to recognize the expense.
While in small businesses Accounts Payable might be handled by an accountant or bookkeeper with ledgers or spreadsheet. Purchasing acquires the materials necessary to maintain targeted inventory levels in support the manufacturing process. To document the purchase, establish the exact nature of the items desired and their respective quantities, set prices, etc., a Purchase Order is created by the Buyer and is sent to the Seller either electronically or on paper. The Seller fills the order, completely or partial.ly (in accordance with the requirements of the Purchase Order.) and delivers the materials to the Buyer's designated location.
Once received by the Buyer, the material is recorded in an inventory control system which is maintained in tally. The Seller, meanwhile, prepares and delivers to the Buyer an invoice that represents the amount due and payable in exchange for the materials provided.
The Accounts Payable department of the Buyer compares the invoice to the original Purchase Order to ensure the purchase was properly authorized and to confirm that the terms on the invoice are consistent with those documented in the Purchase Order. The Accounts Payable department also confirms through the inventory control process that the materials represented by the invoice have been received in a satisfactory and acceptable condition.
When a company orders and receives goods in advance of paying for them, we say that the company is purchasing the goods on account or on credit. The supplier (or vendor) of the goods on credit is also referred to as a creditor. If the company receiving the goods does not sign a promissory note, the vendor's bill or invoice will be recorded by the company in its liability account Accounts Payable.
As is expected for a liability account, Accounts Payable will normally have a credit balance. Hence, when a vendor invoice is recorded, Accounts Payable will be credited and another account must be debited (as required by double-entry accounting). When an account payable is paid, Accounts Payable will be debited and Cash will be credited. Therefore, the credit balance in Accounts Payable should be equal to the amount of vendor invoices that have been recorded but have not yet been paid.
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1NZ17MBA61