Module 2- Accounts Payable

Module 2 - Accounts Payable

Page 1: Introduction

• St. Joseph's College Module 2 Accounts Payable

Page 2: Syllabus

• Overview of Accounts Payable:

  • Various activities in accounts payable and their accounting impact.

  • Types of invoice matching and issue resolution.

  • Payment procedures and modes of payment.

  • Employee payments (T&E and various cards) plus debit balances, write-backs, and discount adjustments.

  • Help desk activities, vendor account reconciliation, and latest developments (Vendor Portal, EDI, E-Invoicing, tools, etc.).

Page 3: Definition of Accounts Payable

• Accounts payable refers to money owed by a person or company to vendors for products or services purchased on credit.

• Payment obligation arises upon receipt of goods/services as per agreed terms and conditions.

Page 4: Scope and Duties of Accounts Payable

• Responsibilities:

  • Creating and maintaining vendor records.

  • Accurate and timely processing of vendor payments.

  • Resolve vendor queries and issues.

  • Reimburse employees for travel expenses.

  • Ensure adherence to local laws in processes.

Page 5: P2P Process - Purchasing

• Steps in Procurement:

  • Identify suppliers.

  • Establish terms and conditions.

  • Issue purchase orders.

  • Act as a single point of contact for vendors and resolutions.

Page 6: Vendor Maintenance in P2P

• Functions:

  • Create and update vendor records as part of the procurement process.

Page 7: Accounts Payable in P2P

• Key Processes:

  • Process invoices, make payments, resolve queries, handle exceptions, manage debit balances, and perform reconciliations.

Page 8: Vendor Master Creation

• Purpose:

  • Capture vendor details, provide unique reference codes, and support address and payment changes.

Page 9: Core Activities of Vendor Master Team

• Responsibilities:

  • Create, amend, activate/deactivate, and merge vendor records.

Page 10: Creating Vendor Records

• Details Captured:

  • Address, contact details, communication preferences, etc., for efficient vendor interactions.

Page 11: Vendor Master File

• Importance:

  • A central repository for vendor details crucial for procurement, accounts payable, and finance.

  • Contains all necessary vendor information and payment specifications.

Page 12: Key Vendor Master Fields

• Essential fields include:

  • Name, address, payment terms, and financial details such as bank information.

Page 13: Vendor Master Processes

• Activities Involved:

  • Creation, editing, blocking/unblocking records, and merging records.

Page 14: Sub-Processes and Activities

• Key Actions:

  • Authorization of master record modifications and vendor requests.

Page 15: Processing New Vendor Requests

• Methods:

  • Requests can be sent via fax, email, or workflow tools to ensure traceability and control.

Page 16: Vendor Master Team Responsibilities

• Ensuring Compliance:

  • Verification of documents and vendor existence before proceeding with vendor creation.

Page 17: Outsourcing Scenario

• Vendor Support Process:

  • Involves approval and processing of vendor templates for onboarding.

Page 18: High-Level Process Flow for Vendor Master

• Steps:

  • Request approval, review documents, and update ERP accordingly.

Page 19: Best Practices

• Recommendations:

  • Standardizing vendor creation requests and ensuring a central data flow.

Page 20: Vendor Portal

• Purpose:

  • An adaptive tool for suppliers to manage information and submissions online.

Page 21: Vendor Portal (Continued)

• Vendor Responsibilities:

  • Regularly update personal and product information.

Page 22: Employee Master Data Management

• Importance:

  • Maintain updated records to prevent duplicate entries and fraudulent activities.

Page 23: Overview of Accounts Payable Processes

• Summary:

  • Processes linked to the P2P workflow emphasizing efficiency and accuracy.

Page 24: Department Functions

• Accounts Payable Functions:

  • Include purchasing, administration, materials storage, and financial management tasks.

Page 25: Purchases Department Functions

• Focus Areas:

  • Vendor development and initiating purchases via purchase orders.

Page 26: Administration Department Functions

• Responsibilities:

  • Approve invoices and provide support for purchase activities.

Page 27: Materials Storage Department Functions

• Tasks:

  • Manage inventory custody and quality control.

Page 28: Accounts Department Functions

• Core Activities:

  • Invoice verification, payment processing, vendor maintenance, and reporting.

Page 29: Invoice Processing

• Definition:

  • Proof of transaction between supplier and buyer, detailing goods/services provided.

Page 30: Procurement Processing and Invoice Processing

• Phases:

  • Includes identification of goods/services, creation/issuance of purchase orders, and receipt confirmation.

Page 31: Timely Booking of Purchases and Expenses

• Importance:

  • Ensures accurate financial reporting and reflects true value of accounts.

Page 32: Invoice Processing Overview

• Steps Involved:

  • Sorting, scanning, validating invoices, and processing in the ERP system.

Page 33: Invoice Processing (Continued)

• Validation Steps:

  • Involves rejection of illegible invoices and updating vendor accounts.

Page 34: High-Level Invoice Processing Flow

• Steps:

  • Document scanning, validation, entry into ERP, and follow-up on resolutions.

Page 35: Invoice Life Cycle (PO Invoices)

• Process Steps:

  • Scanning invoices, querying within systems, performing three-way matches.

Page 36: Invoice Life Cycle (Continued)

• Payment Release:

  • On due date, payment processed based on established liability.

Page 37: Common Mistakes in Invoice Processing

• Key Errors:

  • Incorrect POs, dates, pay sites, amounts, mismatches, tax entries, and currencies.

Page 38: Verification Precautions

• Checklist:

  • Ensure documents are legitimate invoices and correctly addressed.

Page 39: Further Verification Steps

• Critical Checks:

  • Confirm approvals, categorize suppliers, and validate currency entries.

Page 40: Non-PO Invoices

• Definition:

  • Invoices without an actual purchase order, typically for indirect purchases.

Page 41: Non-PO Invoice Life Cycle

• Process Steps:

  • Scanned, queried, and itemized before approval and payment processing.

Page 42: Precautions for Non-PO Invoices

• Verification Points:

  • Check for PO number, company details, and handling instructions.

Page 43: Verification of Non-PO Invoices (Continued)

• Critical Aspects:

  • Ensure all details relate correctly to the invoicing process.

Page 44: Accounting Entries for Credit Payments

• Recording Process:

  • Debit Purchases/Stock accounts; credit vendor accounts and bank accounts according to transactions.

Page 45: Accounting for Non-Credit/Direct Payments

• Process Explanation:

  • Similar recording process highlighting the liabilities associated with vendor payments.

Page 46: Employee Payments

• Travel and Entertainment Processing:

  • Employees submit travel claims with supporting templates for reimbursements.

Page 47: E-invoice Employee Payments

• Workflow:

  • Expenses consolidated into T&E templates and submitted for approval and verification.

Page 48: EDI Invoices

• Definition and Benefits:

  • Electronic data interchange between vendors and accounting systems for streamlined invoice processing.

Page 49: Accounting for Discounts

• Types:

  • Trade, quantity, and cash discounts with various accounting methods for recording.

Page 50: Gross Recording of Purchase Discounts

• Example:

  • Specific journal entries illustrating gross method of accounting for discounts related to vendor payments.

Page 51: Payment Date Impact on Discounts

• Scenario:

  • Adjusting journal entries based on timing of payments and terms set with vendors.

Page 52: Net Recording of Purchase Discounts

• Process Explanation:

  • Proper entries based on vendor agreements and recording processes for actual payments made.

Page 53: International Commercial Terms

• Terms Overview:

  • Key terms like FOB, C&F, and CIF and their implications for shipping costs and responsibilities.

Page 54: Importance of Accounts Payable

• Key Risks:

  • Incorrect processing may lead to cash flow issues, damaging business credibility and increasing administrative tasks.

Page 55: Credit Note Processing

• Definition and Purpose:

  • Used to adjust invoices and payments for returned goods or discrepancies.

Page 56: Credit Note What is It?

• Details:

  • Core functions of credit notes regarding returns and adjustments in supplier relations.

Page 57: Situations for Using Credit Notes

• Common Scenarios:

  • Overcharging, short shipments, faulty goods, and post-invoice discounts.

Page 58: Credit Note Verification Steps

• Key Checks:

  • Ensure the document is legitimate and entries align with the original purchase order.

Page 59: Debit Notes

• Definition:

  • Used for recovering dues from vendors for defective goods or dissimilar issues in transactions.

Page 60: ERS (Evaluated Receipt Settlement)

• Process Overview:

  • Agreement where goods received trigger payments without traditional invoicing, improving efficiency.

Page 61: ERS Benefits (Continued)

• Additional Advantages:

  • Reduces invoicing errors and enhances timely payments.

Page 62: Payment Process Overview

• Goals:

  • Ensure timely and accurate vendor payments to maintain good vendor relationships and improve credit ratings.

Page 63: Payment Cycle Frequencies

• Payment Scheduling:

  • Utility payments thrice weekly, employee reimbursements thrice weekly, and regular supplier payments twice weekly.

Page 64: Payment Process Sub-Activities

• Key Steps:

  • Report creation, payment batch setup, approvals, and execution of disbursements.

Page 65: Payment Process Steps

• Execution:

  • Payments processed after validation and authorization through ERP systems.

Page 66: Payment Delivery Methods

• Methods:

  • EFT/Wire transfers, check printing, and notifications sent via various channels.

Page 67: Payment Workflow

• Final Steps:

  • How invoices processed lead to checks or electronic transfers to pay vendors accurately.

Page 68: Debit Balances in Accounts Payable

• Understanding:

  • Amounts owed back to the organization due to various factors like excess payments or erroneous postings.

Page 69: Situations Leading to Debit Balances

• Common Causes:

  • Include overpayments, double payments, or outstanding credit vs. invoice discrepancies.

Page 70: Purpose of Debit Balance Analysis

• Objectives:

  • Ensure timely recovery, prevent bad debts, and correct errors in accounts payable.

Page 71: Process for Analyzing Debit Balances

• Steps to Follow:

  • Consolidate reports, analyze reasons, communicate with vendors for refunds or adjustments.

Page 72: Follow-Up Processes

• Actions to Take:

  • Maintain diligent tracking of refunds and escalate if necessary, involve clients in discussions.

Page 73: Expected Outcomes

• Conclusion:

  • Successful recoveries and maintained vendor relations lead to effective payment processing.

Page 74: Write Off & Uncollectible Debit Balances

• Procedure:

  • Assess validity of entries, document disputes, and determine actions for valid deductions.

Page 75: Invoice Audit and Recovery

• Purpose:

  • Rectify errors and recover overpayments to enhance future payment performance efficiency.

Page 76: Common Findings in Audit Processes

• Typical Issues:

  • Duplicate payments, wrong amounts, incorrect currency, and other inconsistencies.

Page 77: Audit Process Steps

• Examination:

  • Analyze transaction flows and compare across multiple dimensions for effectiveness and discrepancies.

Page 78: Vendor Reconciliation

• Definition:

  • Balancing vendor statements with accounts payable ledger to identify discrepancies and reasons for them.

Page 79: Benefits of Vendor Reconciliation

• Key Advantages:

  • Early detection of errors, standardized processes, and retained control over payments until issues are resolved.

Page 80: Vendor Support Systems

• Help Desk Functions:

  • Address queries related to invoice statuses, payments, and related information promptly.

Page 81: Optical Character Reading (OCR)

• Overview of OCR:

  • Technology enabling document digitization and reading through character recognition.

Page 82: Use of OCR in Invoice Processing

• Functionality:

  • Streamlines data capture by defining parameters and utilizing AI for invoice recognition.

Page 83: OCR Process Flow

• Flow Steps:

  • Covers image acquisition, character segmentation and recognition, and post-processing actions.

Page 84: Merits & Demerits of OCR

• Advantages/Drawbacks:

  • Provides benefits in efficiency and quality but requires significant investment and parameter setup time.

Page 85: Working Capital and Accounts Payable

• Working Capital Definition:

  • Current assets minus current liabilities and its influence on overall financial management through AP practices.

Page 86: Auto Help Desk Functionality

• Automated Support Features:

  • Includes ticket creation, email handling, knowledge base access, and tracking systems for vendor support.

Module 2 - Accounts Payable

Page 1: Introduction

St. Joseph's College Module 2 Accounts Payable

Page 2: Syllabus

Overview of Accounts Payable:

• Various activities in accounts payable and their accounting impact.This includes handling bills, ensuring timely payments, and maintaining vendor relationships. For example, ensuring that payments are made promptly to maintain a positive relationship with suppliers can lead to better negotiating power.

• Types of invoice matching and issue resolution.Methods include three-way matching (comparing the purchase order, receiving report, and supplier invoice) to ensure that invoices are accurate. For instance, if an invoice does not match the purchase order, it may require further investigation.

• Payment procedures and modes of payment.This encompasses payment methods including ACH (automated clearing house), checks, and credit cards. For example, utilizing electronic payments can speed up transactions and reduce processing costs.

• Employee payments (T&E and various cards) plus debit balances, write-backs, and discount adjustments.Travel and Expense (T&E) processes are often complicated and may involve multiple approvals; for example, a manager may need to approve travel expenses claimed by an employee.

• Help desk activities, vendor account reconciliation, and latest developments (Vendor Portal, EDI, E-Invoicing, tools, etc.).The help desk assists with vendor inquiries and account reconciliation to ensure that records match; for instance, if a vendor queries a delayed payment, the help desk can provide payment status updates.

Page 3: Definition of Accounts Payable

• Accounts payable refers to money owed by a person or company to vendors for products or services purchased on credit.For example, if a company buys office supplies on credit, the amount owed to the supplier is recorded as accounts payable.

• Payment obligation arises upon receipt of goods/services as per agreed terms and conditions.This means that once the goods are received, the company is obligated to pay the vendor according to the payment terms, such as within 30 days.

Page 4: Scope and Duties of Accounts Payable

Responsibilities:

• Creating and maintaining vendor records.This involves gathering information about vendors and ensuring it is current. For example, if a vendor changes its address, the accounts payable team must update their records accordingly.

• Accurate and timely processing of vendor payments.Ensuring invoices are processed without delay helps maintain good vendor relationships, thus fostering timely deliveries and services.

• Resolve vendor queries and issues.This may include addressing disputes over invoices or payment statuses; for example, if a vendor claims they haven’t been paid after the invoice due date, prompt resolution is crucial.

• Reimburse employees for travel expenses.Employees submit claims for reimbursement, which must be validated and processed, ensuring all expenses comply with company policy.

• Ensure adherence to local laws in processes.This involves understanding tax implications and labor laws that may affect payments to vendors and employees.

Page 5: P2P Process - Purchasing

Steps in Procurement:

• Identify suppliers.This can involve researching potential vendors to find those offering the necessary products or services at a competitive price.

• Establish terms and conditions.Terms include payment terms (e.g., net 30), delivery details, and quality standards for products or services purchased.

• Issue purchase orders.A formal document that initiates a purchase transaction, specifying quantities, prices, and terms. For example, issuing a purchase order to a supplier reflecting agreed terms ensures clarity.

• Act as a single point of contact for vendors and resolutions.Having a designated person or department to address vendor issues ensures that queries are resolved quickly and efficiently.

Page 6: Vendor Maintenance in P2P

Functions:

• Create and update vendor records as part of the procurement process.This involves gathering contact details, payment terms, and historical transaction data for effective management.

Page 7: Accounts Payable in P2P

Key Processes:

• Process invoices, make payments, resolve queries, handle exceptions, manage debit balances, and perform reconciliations.Each step is crucial for maintaining accurate financial records and ensuring vendors are paid accurately and on time.

Page 8: Vendor Master Creation

Purpose:

• Capture vendor details, provide unique reference codes, and support address and payment changes.Unique identifiers help streamline vendor management and ensure accurate record-keeping.

Page 9: Core Activities of Vendor Master Team

Responsibilities:

• Create, amend, activate/deactivate, and merge vendor records.This process ensures only current, relevant vendor information is available for accounts payable functions.

Page 10: Creating Vendor Records

Details Captured:

• Address, contact details, communication preferences, etc., for efficient vendor interactions.For example, setting preferences for communication can help ensure timely messages about orders or payments reach the correct person.

Page 11: Vendor Master File

Importance:

• A central repository for vendor details crucial for procurement, accounts payable, and finance.It acts as a comprehensive reference for all vendor interactions, ensuring coherence across different departments.

Page 12: Key Vendor Master Fields

Essential fields include:

• Name, address, payment terms, and financial details such as bank information.Including these details ensures that all necessary information is easily accessible when needed for payments or correspondence.

Page 13: Vendor Master Processes

Activities Involved:

• Creation, editing, blocking/unblocking records, and merging records.These processes help ensure the accuracy and relevance of vendor information.

Page 14: Sub-Processes and Activities

Key Actions:

• Authorization of master record modifications and vendor requests.This action ensures that only verified changes are made to vendor records, protecting the integrity of the data.

Page 15: Processing New Vendor Requests

Methods:

• Requests can be sent via fax, email, or workflow tools to ensure traceability and control.Each method provides paper trails and documentation that is essential for future audits or references.

Page 16: Vendor Master Team Responsibilities

Ensuring Compliance:

• Verification of documents and vendor existence before proceeding with vendor creation.This step mitigates risks associated with fraud and confirms the legitimacy of suppliers.

Page 17: Outsourcing Scenario

Vendor Support Process:

• Involves approval and processing of vendor templates for onboarding.This ensures that all new vendors are properly vetted and onboarded with the correct procedures in place.

Page 18: High-Level Process Flow for Vendor Master

Steps:

• Request approval, review documents, and update ERP accordingly.Each step requires careful execution to ensure the integrity of vendor data in the system.

Page 19: Best Practices

Recommendations:

• Standardizing vendor creation requests and ensuring a central data flow.This minimizes errors and enhances data accuracy across the organization.

Page 20: Vendor Portal

Purpose:

• An adaptive tool for suppliers to manage information and submissions online.This allows vendors to update their own details, reducing administrative overhead for accounts payable teams.

Page 21: Vendor Portal (Continued)

Vendor Responsibilities:

• Regularly update personal and product information.This helps maintain accurate records and ensures timely communication between vendors and the company.

Page 22: Employee Master Data Management

Importance:

• Maintain updated records to prevent duplicate entries and fraudulent activities.Accurate employee data is essential for proper processing of reimbursements and payroll.

Page 23: Overview of Accounts Payable Processes

Summary:

• Processes linked to the P2P workflow emphasizing efficiency and accuracy.A thorough overview allows for the identification of bottlenecks or inefficiencies that can be addressed to improve performance.

Page 24: Department Functions

Accounts Payable Functions:

• Include purchasing, administration, materials storage, and financial management tasks.Each department plays a role in ensuring that the accounts payable process flows smoothly and complies with regulations.

Page 25: Purchases Department Functions

Focus Areas:

• Vendor development and initiating purchases via purchase orders.Robust vendor relationships enhance purchasing strategies and negotiations.

Page 26: Administration Department Functions

Responsibilities:

• Approve invoices and provide support for purchase activities.This ensures proper checks and balances are in place before payments are made.

Page 27: Materials Storage Department Functions

Tasks:

• Manage inventory custody and quality control.Effective management ensures that goods meet company standards and are available for use when needed.

Page 28: Accounts Department Functions

Core Activities:

• Invoice verification, payment processing, vendor maintenance, and reporting.These functions are critical for accurate financial reporting and accountability.

Page 29: Invoice Processing

Definition:

• Proof of transaction between supplier and buyer, detailing goods/services provided.An invoice serves as a legal document and is used for both payment and audit purposes.

Page 30: Procurement Processing and Invoice Processing

Phases:

• Includes identification of goods/services, creation/issuance of purchase orders, and receipt confirmation.Each phase must be documented for auditing and compliance purposes.

Page 31: Timely Booking of Purchases and Expenses

Importance:

• Ensures accurate financial reporting and reflects the true value of accounts.Delay in booking can lead to inconsistencies in financial statements, impacting business decisions.

Page 32: Invoice Processing Overview

Steps Involved:

• Sorting, scanning, validating invoices, and processing in the ERP system.Each step is vital for ensuring that only legitimate and accurate invoices are processed.

Page 33: Invoice Processing (Continued)

Validation Steps:

• Involves rejection of illegible invoices and updating vendor accounts.Proper validation is necessary to prevent incorrect payments and potential fraud.

Page 34: High-Level Invoice Processing Flow

Steps:

• Document scanning, validation, entry into ERP, and follow-up on resolutions.A streamlined flow helps in maintaining accuracy and efficiency in processing invoices.

Page 35: Invoice Life Cycle (PO Invoices)

Process Steps:

• Scanning invoices, querying within systems, performing three-way matches.Each step is necessary for confirming the legitimacy of the invoice and ensuring discrepancies are resolved.

Page 36: Invoice Life Cycle (Continued)

Payment Release:

• On due date, payment processed based on established liability.Timely payments are essential to maintaining good vendor relationships and avoiding late fees.

Page 37: Common Mistakes in Invoice Processing

Key Errors:

• Incorrect POs, dates, pay sites, amounts, mismatches, tax entries, and currencies.Each of these errors can lead to overpayments, disputes, or legal issues if not handled correctly.

Page 38: Verification Precautions

Checklist:

• Ensure documents are legitimate invoices and correctly addressed.A thorough review process can prevent errors from impacting financial statements.

Page 39: Further Verification Steps

Critical Checks:

• Confirm approvals, categorize suppliers, and validate currency entries.These actions can help in preventing fraud and ensuring compliance with company policies.

Page 40: Non-PO Invoices

Definition:

• Invoices without an actual purchase order, typically for indirect purchases.Such invoices may require additional scrutiny to verify legitimacy.

Page 41: Non-PO Invoice Life Cycle

Process Steps:

• Scanned, queried, and itemized before approval and payment processing.Each stage must be meticulously documented to ensure compliance and facilitate audits.

Page 42: Precautions for Non-PO Invoices

Verification Points:

• Check for PO number, company details, and handling instructions.This ensures all accountability measures are in place for accurate processing.

Page 43: Verification of Non-PO Invoices (Continued)

Critical Aspects:

• Ensure all details relate correctly to the invoicing process.Accurate verification prevents discrepancies and potential fraud.

Page 44: Accounting Entries for Credit Payments

Recording Process:

• Debit Purchases/Stock accounts; credit vendor accounts and bank accounts according to transactions.Accurate accounting records are essential for financial transparency.

Page 45: Accounting for Non-Credit/Direct Payments

Process Explanation:

• Similar recording process highlighting the liabilities associated with vendor payments.Proper accounting practices help in maintaining an accurate financial health representation.

Page 46: Employee Payments

Travel and Entertainment Processing:

• Employees submit travel claims with supporting templates for reimbursements.Quick and accurate processing ensures employee satisfaction and prevents delays.

Page 47: E-invoice Employee Payments

Workflow:

• Expenses consolidated into T&E templates and submitted for approval and verification.Implementing an online system for submissions can facilitate timely reimbursements.

Page 48: EDI Invoices

Definition and Benefits:

• Electronic data interchange between vendors and accounting systems for streamlined invoice processing.Using EDI can reduce the time spent on manual data entry and minimize errors.

Page 49: Accounting for Discounts

Types:

• Trade, quantity, and cash discounts with various accounting methods for recording.Understanding different discounts helps in negotiating better terms with suppliers.

Page 50: Gross Recording of Purchase Discounts

Example:

• Specific journal entries illustrating gross method of accounting for discounts related to vendor payments.An example could be recording a discount taken for early payment against the full invoice amount.

Page 51: Payment Date Impact on Discounts

Scenario:

• Adjusting journal entries based on timing of payments and terms set with vendors.Different payment dates may influence the discount received, requiring adjustments in accounting entries.

Page 52: Net Recording of Purchase Discounts

Process Explanation:

• Proper entries based on vendor agreements and recording processes for actual payments made.This method ensures that financial statements reflect the true expenses incurred.

Page 53: International Commercial Terms

Terms Overview:

• Key terms like FOB, C&F, and CIF and their implications for shipping costs and responsibilities.Understanding these terms is essential for international trade transactions and managing shipping costs.

Page 54: Importance of Accounts Payable

Key Risks:

• Incorrect processing may lead to cash flow issues, damaging business credibility and increasing administrative tasks.Proper accounts payable management mitigates such risks and ensures smooth financial operations.

Page 55: Credit Note Processing

Definition and Purpose:

• Used to adjust invoices and payments for returned goods or discrepancies.Credit notes serve as a record to ensure that adjustments are accounted for accurately.

Page 56: Credit Note What is It?

Details:

• Core functions of credit notes regarding returns and adjustments in supplier relations.Maintaining clear record-keeping of credit notes helps prevent payment disputes.

Page 57: Situations for Using Credit Notes

Common Scenarios:

• Overcharging, short shipments, faulty goods, and post-invoice discounts.Each scenario necessitates a credit note to properly adjust both records and payments with vendors.

Page 58: Credit Note Verification Steps

Key Checks:

• Ensure the document is legitimate and entries align with the original purchase order.These checks safeguard against potential discrepancies in financial records.

Page 59: Debit Notes

Definition:

• Used for recovering dues from vendors for defective goods or dissimilar issues in transactions.This process ensures that companies recover overpayments or damages incurred.

Page 60: ERS (Evaluated Receipt Settlement)

Process Overview:

• Agreement where goods received trigger payments without traditional invoicing, improving efficiency.This method reduces the administrative burden related to invoice matching and payment processing.

Page 61: ERS Benefits (Continued)

Additional Advantages:

• Reduces invoicing errors and enhances timely payments.Implementing ERS can significantly streamline the procurement process.

Page 62: Payment Process Overview

Goals:

• Ensure timely and accurate vendor payments to maintain good vendor relationships and improve credit ratings.Successful payment processes contribute to a healthy cash flow and operational efficiency.

Page 63: Payment Cycle Frequencies

Payment Scheduling:

• Utility payments thrice weekly, employee reimbursements thrice weekly, and regular supplier payments twice weekly.Regular payment cycles help maintain operational consistency and supplier confidence.

Page 64: Payment Process Sub-Activities

Key Steps:

• Report creation, payment batch setup, approvals, and execution of disbursements.Each step provides filter points for ensuring accuracy and compliance.

Page 65: Payment Process Steps

Execution:

• Payments processed after validation and authorization through ERP systems.This safeguards the organization against unauthorized transactions and ensures accountability.

Page 66: Payment Delivery Methods

Methods:

• EFT/Wire transfers, check printing, and notifications sent via various channels.Each method offers unique benefits and must be chosen based on vendor capabilities and preferences.

Page 67: Payment Workflow

Final Steps:

• How invoices processed lead to checks or electronic transfers to pay vendors accurately.Ensuring workflow transparency helps in tracking and accountability.

Page 68: Debit Balances in Accounts Payable

Understanding:

• Amounts owed back to the organization due to various factors like excess payments or erroneous postings.Identifying and rectifying these balances is crucial for accurate financial reporting.

Page 69: Situations Leading to Debit Balances

Common Causes:

• Overpayments, double payments, or outstanding credit vs. invoice discrepancies.Understanding these causes assists in properly managing vendor relationships.

Page 70: Purpose of Debit Balance Analysis

Objectives:

• Ensure timely recovery, prevent bad debts, and correct errors in accounts payable.Addressing these issues strengthens financial integrity and positive vendor relations.

Page 71: Process for Analyzing Debit Balances

Steps to Follow:

• Consolidate reports, analyze reasons, communicate with vendors for refunds or adjustments.Effective communication is key to resolving issues and preventing future occurrences.

Page 72: Follow-Up Processes

Actions to Take:

• Maintain diligent tracking of refunds and escalate if necessary, involve clients in discussions.Maintaining a clear follow-up process ensures no refund is missed.

Page 73: Expected Outcomes

Conclusion:

• Successful recoveries and maintained vendor relations lead to effective payment processing.Strong relationships with vendors contribute to favorable terms and operations.

Page 74: Write Off & Uncollectible Debit Balances

Procedure:

• Assess the validity of entries, document disputes, and determine actions for valid deductions.With accurate assessments, companies can minimize losses and clear their books.

Page 75: Invoice Audit and Recovery

Purpose:

• Rectify errors and recover overpayments to enhance future payment performance efficiency.Regular audits help to continuously improve accounts payable processes.

Page 76: Common Findings in Audit Processes

Typical Issues:

• Duplicate payments, wrong amounts, incorrect currency, and other inconsistencies.Identifying these issues promptly is what audits aim to do to maintain the integrity of finances.

Page 77: Audit Process Steps

Examination:

• Analyze transaction flows and compare across multiple dimensions for effectiveness and discrepancies.A comprehensive examination provides insights into operational efficiencies.

Page 78: Vendor Reconciliation

Definition:

• Balancing vendor statements with accounts payable ledgers to identify discrepancies and reasons for them.Reconciliation ensures that both parties have aligned records, which is essential for resolving disputes.

Page 79: Benefits of Vendor Reconciliation

Key Advantages:

• Early detection of errors, standardized processes, and retained control over payments until issues are resolved.These benefits collectively enhance the operational capacity and accuracy of accounts payable.

Page 80: Vendor Support Systems

Help Desk Functions:

• Address queries related to invoice statuses, payments, and related information promptly.A responsive support system fosters positive interactions and trust among vendors.

Page 81: Optical Character Reading (OCR)

Overview of OCR:

• Technology enabling document digitization and reading through character recognition.OCR technology is increasingly utilized to streamline data capture processes, eliminating manual entry errors.

Page 82: Use of OCR in Invoice Processing

Functionality:

• Streamlines data capture by defining parameters and utilizing AI for invoice recognition.This application dramatically reduces the time needed for data entry and increases accuracy.

Page 83: OCR Process Flow

Flow Steps:

• Covers image acquisition, character segmentation and recognition, and post-processing actions.Each step is designed to maximize efficiency and minimize errors during invoice processing.

Page 84: Merits & Demerits of OCR

Advantages/Drawbacks:

• Provides benefits in efficiency and quality but requires significant investment and parameter setup time.Weighing these factors helps organizations decide on OCR adoption.

Page 85: Working Capital and Accounts Payable

Working Capital Definition:

• Current assets minus current liabilities and its influence on overall financial management through AP practices.Effective accounts payable management directly