Accounts payable refers to money owed by an organization to its creditors, which is listed as a financial liability on the organization's balance sheet. For most companies, accounts payable are recorded as assets with the exception of certain types of accounts that are considered receivables.
Take note that this is different from general bills–liabilities incurred by formal legal document instruments. General bills are general categories of debt, such as rent or mortgage payments. These accounts are not included in the balance sheet and are usually depreciated over time in the cost of goods sold.
As a business’ operations go into full swing, it’s easy for all the accounts payables records to pile up. A common problem experienced by many is the backlogs of the accounts payable. If you’ve been experiencing backlogs in your business’ accounts payable, here are some of the best tips to help solve your problem:
Use Technology To Your Advantage
There are now software programs that can automate manual tasks in your business processes, such as NetSuite AP automation. Using such software can shorten and simplify the entire process. That way, you become more efficient with your time, helping you avoid both backlogs and human error.
Here are tips you can apply when using accounts payable reporting software:
- Use laser printed checks as these can automatically update the system;
- Incorporate functions that enable you to analyze and reduce errors, such as the paying of incorrect amounts;
- Run aging reports from time to time, such as through regular check runs.
Remember To Stay Accurate At All Times
Above all other factors you should remember when recording and going through the accounts payable process, the most important is to stay accurate all the time.
If you stay accurate in every step of the process, this can greatly eliminate your backlog. This is because it lessens the need for accountants to go through every step of the process just to double-check for any imbalance. More so, you can be confident in your system since you’re able to prevent fraud altogether.
Before processing any invoice for payment, you may want to ask the following questions:
- Are all the unit costs and calculations, including tax, correct?
- Does the invoice record the exact amount that the company ordered?
- Has the company received the goods or services billed in the invoice?
Employ The Services Of A Good Financial Planner And Accountant
A good accountant works hand-in-hand with financial planners. After all, these are the professionals that are equipped with the skills and knowledge in accounting.
If you want to manage your accounts well, you need to get hold of a good accountant and financial planner. They’ll provide you with relevant information about your financial affairs and advise you accordingly.
Furthermore, financial planners and accountants help organizations and people to take advantage of the opportunities available in the present economy. They help business people and companies maximize the benefits of their investments while minimizing the risks associated with financial dealings.
Optimize The Key Steps In The Entire Process
The accounts payable process doesn’t need to be always confusing. In fact, you can speed up the entire process by optimizing the key steps involved.
These key steps can be summarized into three:
- Completing the purchase order, which refers to the process of setting out items or services to be purchased, including their respective prices;
- Processing the receiving report, wherein the supplier records the goods or services provided and lists all the payments that are owed;
- Receiving and processing supplier invoices, whereby your business processes it for payment.
Apply For A Paperless Environment
Going paperless is a great way for companies to save a lot of time and effort in the business process. This applies to both big and small businesses that are yet on the start-up phase.
The idea behind this process is that documents can now be stored electronically without having to print them out. This means that paper, pens, envelopes, and more are already irrelevant. With this, the whole process, even beyond accounts payables, speeds up.
The paperless business has a number of advantages, such as the following:
- You get faster access to important documents and other information.
- You have more control over costs.
- You can shorten what would’ve otherwise been a long and repetitive process as there’s no more time spent on printing, stamps, etc.
- You can increase employee productivity by allowing employees to use the business's own computer and e-mail system.
When using a paperless software for accounts payable, here are some tips you can apply:
- Creating a few folder templates in Microsoft Office can be very helpful in the beginning because they can give an image of what you would expect to see with these folders. It’ll also give you an idea about how they should be organized.
- Once you have your new folder templates in place, you can then start organizing them. The easiest way to do this is to use folders that are similar to a traditional file folder, but you can include all the same fields.
Another useful option is to create folders that look like a regular letter, which you can send to your employees as a reminder of their work and responsibilities.
With so many different options for storing important files online, you can even choose a paperless filing service that provides its users with a website that they can log in to anytime and access documents and files in the online facility. Basically, the possibilities are endless–you just need to keep trying.
Conclusion
Accounts payable reporting is a vital part of the business sector, particularly accounting and finance. It records financial transactions in terms of payments received or made by an entity in respect of accounts payable. The accounts payable reporting also includes the identification of financial resources that are required to pay off accounts payable.
With all the work involved in ensuring that the reporting is accurate, it’s also common for businesses to experience regular backlogs. The tips above can guide you so you won’t have to suffer the same fate.
Author: Shubham Kumar
Source : https://startuptalky.com/eliminate-backlogs-accounts-payable-process/
Date : 2020-10-02T05:26:29.000Z