Accounts Payable process

Question : What is the Payable Accounts Process ? Answer : Introducation The main purpose of Accounts Payable is to manage the relationships with the suppliers of the company. Every business needs working capital for its day to day operations. It provides liquidity to pay off the obligations. Errors and workload can be reduced if we maintain good understanding with our suppliers on various terms and conditions. Risks face by pluto and teir impact on its business There are many risks faced by the accounts payable process in a computerized environment. But no risks comes without its mitigation strategies. Fruito is facing some of them with their solutions ready in hand. A brief study of the same is as follows:- Invoices small in number A large number of supplier sends huge number of invoices with small amounts thus increasing the workload and chances of error while entering the same into the system. While recording these entries into the computer system chances of wrong data entry occurs. This leads to wrong accounting records of the supplier. In order to reduce this, purchasing department should make necessary arrangements with the supplier to send the monthly invoice instead of small invoices on daily basis ( Hayes et al, 2014). Choosing wrong bank account number In case bank account number is already entered into the system for a vendor, it can be mistaken for a different person if two vendors have the same name. The vendor master file can pick up the wrong account number for the wrong person. This problem has been reported many times. In case any individual is paid wrongly, a credit note should be issued to the same to reverse the payments (Beasley et al, 2014). Inactive suppliers Inactive suppliers increase the risk of fraud. They have the chances of corrupting the master file. Their details such as bank account number, IFSC code, address may get changed without noticing (Bragg 2014).In order to prevent this master file should be updated regularly to discover such changes. Vendor master file contaminatio extent Changing to ERP systems and automating the accounts payable process has deeply impacted the master vendor file and the quality of its data. Incomplete and destroyed data can lead to damages such as excessive payments or serious errors. Typing reeors or manual errors Spelling the supplier name incorrectly or typing the wrong details of the supplier can also lead to unforeseen damages to our company (Arens et al, 2016).One needs to maintain the system of double check of data entry to ensure its accuracy. Duplicate payments Double payments for both the original as well as copy of the invoices are often executed by mistake. Different amount of payments to different suppliers is also often seen in our companys process. Failure to implement the process of accounts payable effectively can hamper the activity of the company to process its invoices in an efficient manner, lose the chances of availing discounts and setting payment terms with the suppliers (Hayes et al., 2014). Internal controls that should be implemented by fruito are Updating the data regularly by analyzing the suppliers information on a constant basis can act as a solution on a short term basis. Making changes to the supplier data must remain the responsibility of a few restricted persons as maintenance of a supplier file is an error sensitive activity. Any addition to the already existing file must be approved and verified by the management (Loftus et al, 2012). Cheking of payment terms It should be ensured that small amount invoices should be merged into one with lump sum amount of payment. This avoids discrepancies in payment. Checking of bank account number that it belongs to the correct vendor should also be done mandatorily (Ittelson 2011).A close check should be kept in place that the same vendor is not paid twice. Original invoices and duplicate invoices should be tracked down to its appropriate vendor. Online supplier portals We can ask our suppliers to give us access to their online portals which will help us to keep a track of all the orders received and payments due. This system can help in cutting down the manual errors and bringing order accuracy (Loftus et al., 2012) Continous monitoring Continuous Monitoring is also known as audit in real time. One should keep a close check on all the happenings in the accounts payable process. Orders received and paid should be checked simultaneously. Any discrepancy should be investigated deep into. Adopting more robust governance practices which can strengthen the internal controls of the entity (Beasley et al., 2014). Using the services of fcompany named tranparent Transparent is an international service provider of controlling and monitoring Accounts Payable processes. Through their expertise they help their client in reducing the number of errors, risks and complexity in the working environment:- Transpareent manifesto Providing accurate measurement of accounts payable. Comparing the performance of companys AP process with that of the industry. Recommending any improvements required in the already existing processes. Collecting all undue payments. Very fast delivery of services. Tranparent approch Benchmark Companys information is benchmarked with that of industry from the collection of database maintained. Software -Transparent uses efficient software to process individual clients data. Secure process-Data is secure in a proficient manner Segregation of duties-Data is divided into various parts and each part is analyzed to extract information from it. Direct supplier contact-Designated team directly contacts the customer for their open credits by sending mails and making multiple calls. Customer relationship-Clients queries are answered by the online dashboard information available No extra efforts-All the processes of Accounts Payable are taken care of including the recovery of amounts. References Arens, A.A., Elder, R.J., Beasley, M.S.Hogan,C.E.(2016).Auditing and Assurance Services. UK.Pearson Loftus, J.A., Leo, K.J., Clark, K.Wise,V.(2012).Understanding Australian Accounting Standards. Melbourne. John Wiley Sons Hoggett,J.,Edwards,L.,Medlin,J.,Chalmers,K.Maxfield,J.(2014).Accounting.Melbourne.John Wiley and Sons,9th revised edition Beasley,M.S.,Bucklers,F.A.,Glover,S.M.Pramitt,D.F. (2014).Auditing Cases:An interactive learning approach. UK.Pearson Publishers Hayes,R.,Wallage,P.Gortemaker,H.(2014).Auditing of Financial Statements-Principals of Auditing.UK.Pearson Publishers Bragg,S.M.(2014).Financial Analysis:A Business Decision Guide.Accounting Tools,2nd edition. Collings,S.M.Loughram,M.(2013).Financial Accounting for Dummies.Melbourne. John Wiley Sons Ittelson,T.R.,(2011).Financial Statements:A step by step guide in understanding and creating Financial Reports.USA.Career pr Inc.