Accounts Reconciliation Blog

How can you be assured that the person handling your accounts payable is reliable? You can actually do a background check with regard to his performance. It is also best to get someone with accounts payable certification. He could either be a CAPP (Certified Accounts Payable Professional) or CAPA (Certified Accounts Payable Associate). CAPP is for managerial or supervisory position while CAPA is for AP specialist that lacks management or professional experience.

Exams for accounts payable certification are tailored to meet the national standards for certification evaluation and assessment. They typically contain questions that would manifest the actual practice done in an accounts payable scenario. These tests rely solely on the examinees’ skills and knowledge so no form of reference material is allowed during the exam. The locations where these exams take place are highly secured and confidential. With the given restrictions and guidelines, you are assured that you will get a very qualified person for your accounts payable once certification is in place.

Most businesses are not very liquid and do operate on credit.  That’s why it’s very important that their accounts payable is well-managed. But what are accounts payable? These focus on the total money that the organization owes the supplier/s for the products they delivered or services they rendered and have not yet been paid. They are capable of regulating the overall financial cycle of the company.

More and more businesses are now outsourcing their accounting tasks. So what are accounts payables outsourcing advantages?

*Assurance of payment/s on time
*Gives leverage of accounts payable expertise
*Financial reports are readily available
*SOX compliant
*Reduced overhead and operating costs

When you’re running a business, you have to be realistic at all times. There are some expected funds that we may not be able to collect and there should be an account in the system that would handle this. Accounts payable allowance is usually used for doubtful accounts. This is the total monetary value of accounts receivable which have high risk of not being paid for by customers. This is a process that forecasts and approximates future bad debts.

Accounts payable allowance is the company’s practice to allot funds to uncollected receivables. Once these allowances are considered as having no possibility for collection, they can now be called bad debts. These are typically written off when companies close their books. When this happens, the written off amount is then take out from the accounts payable allowance and accounts receivable list.

Understanding the total accounting process can be challenging. It could therefore be very helpful if you have a guide that you or your accounting staff can refer to. A perfect example is the accounts payable flowchart. This could demonstrate the process flow of the accounts payable process from start to finish. It could serve as a visual document that could describe A/P activities.

Here’s a sample of a typical accounts payable flowchart:

~Purchase order to the vendor
~Receipt of bill
~Bill recorded to accounts payable
~Alphabetical filing of bills
~Payment of bills
~Issuance of check/ check cutting
~Staple check stub to the bill
~File bill with check stub in the paid bills file

Establishing a solid credit standing can be very tough. However, it is still possible with proper management. Accounts payable payment terms are typically mutually agreed upon by the vendor and the purchaser. These are designed for the benefit of both parties – the purchaser of deferred payment and the supplier of timely payment.

Accounts payable payment terms can be negotiated. This negotiation can further establish a good relationship between the buyer and the supplier. For instance, you may increase payment terms by using electronic funds transfer instead of check issuance. It is also wise to take payment discounts wherein suppliers offer certain reduction on price if you pay within their specified period of time, say 10 days. This will bring back a portion to your working capital

A sound financial state is the backbone of any business. It is expected that both assets and liabilities are standing on solid grounds. Well-managed accounts payable procedures are focused on increasing assets while a sound credit rating is maintained. These are capable of reducing the total processing costs without additional investment. Increase in profits will therefore follow.

There are different methods you can apply to manage your accounts payable procedures:

~Paper elimination
~Enterprise resource planning
~Take payment discounts
~Purchases should be reviewed constantly
~Encourage suppliers to improve process by submitting electronic invoice
~Ensure smooth process of purchasing by eliminating disputes with suppliers
~Errors should be reduced
~Accounts payable staff should have regular formal training
~Negotiate increase in payment terms

The success of any business’ operation largely depends on its financial position. Therefore, it is very important that all the entries in the books are well accounted for. This is where the question “what is full cycle accounts payable” falls. This involves a process wherein the correctness and accuracy of documents exchanged by the vendor and the purchaser.

What is full cycle accounts payable? This is the verification process of the original invoice from the vendor, the purchasing order from the purchasing entity and the receiving slip. Once all of the documents have been authenticated, a check or number of checks is/are issued to the vendor. The process also includes the sending or mailing of the check to the vendor. This cycle is concluded by recording of the transaction for audit and reference.