Accounts payable are the amount a company owes that to its suppliers and vendors. So, it is a liability to the business that you need to clear off as soon as possible. However, the processing of payables is not an easy job. However, if not done correctly, it can easily and adversely affect the business. But thanks to the technology these days, there are various software available in the market for accounts payable processing.
Working On the Accounts Payable Process: We cannot manage Accounts Payable in one or two steps. Rather, it has its own set of processing-cycle. We call this cycle ‘Accounts Payable Cycle’. We also know this account payable cycle as ‘Procedure to Pay’. Let’s learn more about this ‘Procedure To Pay’ cycle.
What Is ‘Procedure to Pay’?
The ‘Procedure To Play’ or P2P cycle belongs to the expenditure cycle of the company. It involves all the steps from the order of purchase to receiving the order and processing final payments. It includes 12 steps:
Determination of Goods Required:
The production departments detect the need for stock and the goods required.
The purchase order is generated by the purchasing department if we have made only no similar orders.
Search for Suppliers:
Potential Suppliers are short-listed or we contact the already tied vendors.
Request for Proposal:
To receive a quotation from the supplier, requests for a proposal are sent to them.
Review Received Quotation:
Review the quotation received from the suppliers that include price, quality of the product.
The company makes negotiations with the selected suppliers to lower the prices.
The purchase order is sent to the supplier after having fixed everything.
The supplier sends confirmation that their order has been placed.
It is the duty of the supplier to send quality and non-damaged goods timely.
On Final Delivery Of Goods:
The goods received are further checked that everything has been sent from the supplier that was ordered.
The entry of the invoice in the books of accounts that further starts the process of payments.
It processes payments in favour of suppliers on the due date.
Using Receipt Bank for Payable Processing:
One of the software that holds great goodwill amongst its users is ‘Receipt Bank’.
Receipt Bank is an easy-to-use software that eliminates the paperwork. It also helps in managing accounts payable easily and hassle-free. This software extracts the data from accounts payables like the amount or the due date for payments and automatically exports to your accounting software. Moreover, it uses OCR technology to extract data that helps avoid manual entry of the data. This further adds up to accuracy, as it involves nominal mistakes.
Credit Of Direct Taxes With Documents from Receipt Banks:
When the Making Tax Digital has introduced, it becomes necessary to have software that can help the businesses to file taxes. With the help of the receipt bank, you can scan and update all your documents required to process for tax payments to the tax portals. It will also increase efficiency and save up a lot of time for the company.
Benefits of Using Receipt Banks:
Using receipt bank offers you many benefits apart from automated fetching of invoice data and import them to your accounting software. They are:
- Paying vendor timely: Paying your vendors timely will not only prevent you from future chaos of payments but will also earn your good points of a timely payer from them. It will also help build trust amongst you and your supplier.
- Cash management: Its feature of automated entry and import of data timely and accurately helps you have an overview of cash-flow in the business.
- Forecasts: With that overview of cash-flow in the business, you can easily be able to forecasts the future requirements of the business based on past transactions.
- Budgeting: Cash management and forecasts will eventually help you during the times of budget formation.
- Accrual accounting: It gets a bit complicated when accrual involves accounting. But with the help of the receipt bank, you will be able to make records from the invoices even if the payments are due. So, there will be less confusion.