Accounting is one of the important parts of any business so is accounts payable. It is one of the critical components of accounting. A proper accounting payable process service ensures a healthy financial position of the organization and provides a better environment for growth.
Proper accounts payable helps build a better reputation for the organization.
The full cycle here considers creating and paying for all the orders in a proper stepwise process. Here, all the invoices of the organizations are processed speedily in a proper step-wise way and ensure that the payments are given before duration.
What are the general steps in the full cycle of the accounts payable process?
1. Purchase orders
A purchase order (PO) is the first step in the process that starts the purchase process. It is sent to the supplying vendor which can be either physical or digital in nature.
PO must consist of some general information like order date, description of the item, quantity, price, etc. It is important to note that PO is different from the invoice.
2. Receiving report
Once you receive the goods or services for the order given, a receiving report is given. The main information in this document includes the number of goods, list of received items, shipping details, the date of the received order, etc. Here, you can also provide different other details.
3. Vendor Invoice
After the vendor fulfills the desired requirement of the company, they need to send an official document for the payments. This document is called an Invoice which contains information like the amount that company owes to the vendor, taxes, freight or shipping charges, payment due date, etc. The accounts team needs to confirm the Invoice received and pave the way to process it further.
4. Matching all the documents
At this stage, all three documents namely – Purchase Order, Receiving the report, and vendor Invoice need to be matched. This is generally called a three-way matching to ensure that there is no error that can lead to financial loss.
In case of any discrepancies, the account payable department must get it rectified properly. Once the Invoice is proper, it is then moved forward.
5. Review & process payments
This is the last step, where a final review of the Invoice is done and approval from the concerned authority is taken before payments. The organization then finally processes the payments.
Conclusion
These are some general steps in the accounts payable process service followed in most profit organizations. Obviously, this process is not as simple as it seems when most organization experiences problems.
So, they consider accounts payable outsourcing service option where experts can work on it. This helps them to achieve better efficiency in the accounts payable process with proper payments.
The reconciliation of the accounts payable need to be done accurately so you do not pay for the stock that it is not received in full or the damages thereof.
The invoicing party needs to either pass a credit note for the damaged stock or credit the initial invoice in full and re-invoice with the correct stock delivered.
Failure to not reconcile properly will create a loss in funds for the business.
Matsobanemetja Business Consulting (Pty) Ltd provides accounts payable outsourcing services for the businesses.
If you are looking to outsource the accounts payable process service to any expert agency then you need to consider the steps they follow during the accounts payable process.
We have well trained and qualified staff that manages these aspects efficiently. We are the fast growing accounting service-providing agency in South Africa and across the globe.
Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.
If you need a consultation with us with regards to your business, any type of business – please reach out to us on email hello@matsobanemetja.blog
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– Michael Carter
Matsobanemetja Business Consulting Pty Ltd 