You can avoid errors and strategize your spending and saving while easily settling your debts. Better manage finances: Knowing what you owe helps you better understand how to manage your business’s finances.Here’s how implementing an accounts payable process can benefit your business: The accounts payable process plays an important role in your business’s accounting operations for several reasons. Why is the accounts payable process important? You can automate reconciliation with accounting software to ensure you’re paying vendors on time to avoid late fees. After a vendor payment has gone through, you can remove it from your list of accounts payable. Once you’ve completed these steps, it’s time to update your books to reflect the most current information. Review your accounts payable weekly to ensure there are no outstanding payments and to confirm you completed the payment. Depending on the vendor’s preference and your payment method, you may need to notify them that payment is on its way. Process payment for outstanding invoicesĪfter verifying the accuracy of your invoices, you can initiate invoice payments to the appropriate vendors. Once you ensure the invoice is correct and approve it, you can record the invoice information in your accounting software, including the invoice number, the amount due, and the due dates. Invoice: Confirm the amount you owe and the payment terms.Order receipt or goods received note: Ensure the vendor delivers the purchase correctly.Purchase order: Use this official order confirmation to verify the quantity, cost, and payment terms. ![]() ![]() Here’s how the three-way match accounts payable process works: You can use the three-way match to verify the invoice before paying them. Using accounting software for this step allows you to automatically track payment terms and assign payment due dates.īefore initiating payment, you’ll want to review your invoice for accuracy and ensure you’ve received the product or service requested. Next, you should assign vendor details to help you keep track of orders and payment deadlines, then assign codes to remind you about future payments.Īssigning codes organizes accounts payable processing so you know when to expect payments. You can also create subcategories to further divide and make them more organized. Generally, a chart of accounts will have five primary account types:Įach account category will have different account names with an associated account number and financial statements. The first step of the accounts payable process is to create a chart of accounts, which is an organizational chart that summarizes where you record accounting transactions.
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