Accounts Payables Services
Accounts Payables Services
Managing Accounts Payable has become a strategic tool for the success of a business. It helps in managing the cash flows of the entity, thereby maintaining the working capital requirements. Efficient handling of accounts payable ensures good business relationship with vendors and helps achieve efficient cost cutting, increased productivity and growth of business.
Accounts Payable are liabilities that would result in outflow of cash from the organisation. They primarily consist of sundry creditors and expenses payable in the near future.
Benefits of Outsourcing Accounts Payable Services
- Free up resource and time for the organisation
- Involves maintaining lesser paper work
- Creation of proper database of purchase orders and invoices in digital form
- Efficient handling of working capital
- Improved vendor relationship
- Avoidance of penalties and fines for late payments
- Chances of availing better credit periods
- Better image of business
Management of Accounts payable
Accounts payable needs to be managed effectively to enhance vendor relations and to efficiently maintain the organisation’s working capital needs. The management of accounts payable consists of the following: -
- Timely receipt of invoices from vendors
- Invoice verification and purchase order matching
- Scheduling timely payments
- Ensuring availability of funds to meet the scheduled payments
- Coordination with other departments such as purchase, cash
- Communication with vendors
Accounts payable cycle
- Issue of Purchase Order
- Actual purchase
- Obtaining invoices
- Verification of invoices
- Reporting of errors, if any
- Recording invoices appropriately in the system
- Ageing and scheduling payments of vendor invoices
- Meeting the scheduled payments
Outsourcing of Accounts payable
Businesses need to primarily focus on their main objectives to survive in this highly competitive world. Therefore, it is preferred to outsource the accounts payable activity to an expert agency. Filecrat, as an accounts payable service provider, would process the invoices and ensure timely payments. We offer these services at reasonable prices to ensure efficient handling of the accounts payable function which leads to significant cost cutting for your business.
Processes in Accounts Payable Service
Invoice Processing: Under this process, the invoices are collected and digitized. This is the first step that initiates the work flow. Its objective is to maintain an e-library of all invoices to be readily available for access at any time in the organisation.
Invoice Verification: Under this process, the contents of the invoice are scrutinized. It is ensured that all the information required in an invoice is correctly available.
Invoice Matching: The matching activity can be of three types: -
1. Two-way matching: It is checked whether quantity billed/ invoiced matches with quantity ordered; and whether invoice price matches with purchase order price.
2. Three-way matching: Including all the checks of two-way matching, it also checks whether quantity billed matches with quantity received.
3. Four-way matching: Including all the checks present in three-way matching, it also checks whether quantity billed matches with quantity accepted.
This step is relevant only for the invoices that were preceded by a purchase order. There are certain expense related invoices such as electricity, rent, etc. which do not require a purchase order. There may also be certain emergency purchases carried out without issuing a purchase order.
Once verification and matching process is complete, the invoice is forwarded to the management for approval. Without approval from the management/ appropriate authority, the invoices cannot be sent for payment.
Exception and Error Management: An error report is prepared where all errors determined during the verification procedure or matching procedure is recorded. These errors are forwarded to the management/ appropriate team for their appropriate treatment.
Creditors balance reconciliation: It is highly essential to reconcile the balances of vendor ledgers in the books of the company with that of the ledgers obtained from the vendors from time to time. This would ensure whether invoices and payments made are correctly recorded both by the company as well as the vendor.
Payment Processing: This involves scheduling the due dates of payments to be made to all creditors and other current liabilities. This is done only after the payment is approved by the management/ appropriate authority. The funds of the organisation are monitored to check whether adequate amount of funds is available to meet the payment requirements.
Vendor Communication: This involves setting up of an appropriate medium, whether through e-mail or through telephonic means by which the vendor can raise any query regarding payments/ invoices. The accounts payable manager should also be able to resolve minor issues in the invoices by directly communicating with the vendor.
What’s Included
- Invoice Processing
- Updating Records related to accounts payable
- Payment Processing
- Vendor communication
- Creditors balance reconciliation
- Monthly Reporting
Documents Required
- List of vendors/ suppliers
- Bank Statements
- Open Purchase Orders
- Invoices received
FAQ's
Depending on the size of the business, the number of vendors doing transactions with the business and frequency of invoices received from such vendors, the management can decide whether the company can easily employ a team in-house for managing the accounts payable or not. When there are a large number of vendors with high frequency of purchases and invoice receipts, outsourcing the accounts payable function can be very effective in cost cutting as well as ensure smooth handling of the invoice processing and payment processing.
It allows the accounts payable manager to verify and match the invoices without any difficulty. The invoices and purchase orders are accessible at all times throughout the organisation.
The invoices are collected either in the physical format or in softcopy form. The invoices are captured and digitized. This is done either by scanning the physical invoices and storing the PDF format in the system or by entering the details of invoice in a standardized software. The softcopy invoices received can be directly entered into the software to update the database. This is followed by invoice verification, matching and obtaining approval from management.
It is essential to reconcile the vendor ledger maintained by the company with the company ledger maintained in the books of the vendor. This should be carried out from time to time to ensure that the books are correct and updated. This will also ensure whether the amount payable to the vendor as per the company books is correct and matches with the amount receivable in the vendor’s books.
HOW FILECRAT WORKS
CHOOSE
With over 100+ offerings, we are here for all your filing needs
PREPARE AND REVIEW
We collect information from you and draft documents
EXECUTE
Finalized document within the agreed turnaround time and you’re done.