8 Key functions of accounts payable department
A successful business is run by the streamlined amalgamation of different processes.
These processes are divided among different personnel, and every department has its unique style of functioning, which means that combined operations can be difficult. But a company has to bring everything together to stay in business.
One of the most burdensome tasks is that of the functions of accounts payable department. With the requirement of regular or frequent reconciliation requirements, the role of the accounts payable department is crucial for a business.
This is because the department takes care of vendor payments and transactions which is a major part of any business operation. An effective and fast-processing AP department is the need of every company.
8 functions of accounts payable department in a business
1. Internal in-house payments
The functions of the accounts payable department are to internally control and manage petty cash, convey reimbursement payments, and control the dispersion of sales tax exemption endorsements.
Internal reimbursement costs follow a business control methodology that expects employees to turn in a manual log report, receipts, or both to prove reimbursement demands.
Petty cash is commonly utilized for little costs, for example, random postage, personal office supplies, or a lunch meeting for business purposes.
The role of the accounts payable department is to keep a stock of supply of sales tax exemption certificates it issues to division supervisors.
2. Vendor payments
Handling approaching invoices and paying the business' vendors/suppliers is the role of the accounts payable department that the vast majority consider primary.
AP sorts out and keeps contact information of the suppliers, payment terms, and revenue data either through the computer system or manually.
3. Processing invoices
Another role of the accounts payable department is to process invoices. Invoice processing needs to be done efficiently and effectively. Manual processing of invoices is time-consuming.
Most businesses have adopted AI technology for the efficient processing of invoices.
4. Matching invoices and storing them
Invoice matching is one of the vital roles of the accounts payable department. Invoice matching and storing can be intricate, tedious, and asset-weighty.
Invoice matching is the most common way of contrasting data on the receipt and supporting records, for example, a purchase request, merchandise receipt, and agreement.
5. Clarifying invoice data, items, and prices with vendors
Functions of accounts payable department is to clarify data, prices, and items associated with invoices. Invoice confirmation ensures whether the merchant is charging clients for what the clients benefited.
It is finished by cross-checking the invoices received against the purchase request and conveyance receipt. A receipt is paid, provided that the receipt subtleties match the supporting reports.
6. Reconciling bank statements
Bank reconciliation alludes to the most common way of contrasting an organization's books and its bank explanations to guarantee that all exchanges are represented.
The reconciliation process is a useful method for keeping exact records, guarding against false charges, and resolving some other disparities or issues.
It is the role of the accounts payable department to reconcile the bank statements of the organization.
Related read: How can automation help ease accounts payable reconciliation?
7. Maintaining vendor relationships
The functions of accounts payable department are to maintain vendor relationships. Supplier-organization relationships are significant on the grounds that they can impact the life span of your agreement, make it simpler to achieve objectives, and increment the potential for effectively coordinated efforts.
8. Correcting problems in invoice data
The role of the accounts payable department is to match invoices and store them for the future. Their work doesn’t end here. In case any problem arises with the invoice, the functions of accounts payable department has to correct it.
How to improve the efficiency of the accounts payable department?
The functions of accounts payable department are utilizing accounts payable AI software. The way that the accounts payable department handle center business processes are evolving quickly.
To stretch out beyond the bend and adjust to these changes, consider another authoritative diagram structure for the AP administration. Moving roles for AP better lines up with financial administration's insightful and key objectives.
AP automation programming utilizes robotic process automation (RPA) by applying standard principles to routine records payable cycles.
Automation and robots might unnerve a few individuals from the accounts payable department who dread the deficiency of their positions when work is robotized with new frameworks.
Difficulties faced by the accounts payable department
• Answering steady bothering of incoming seller calls about when they'll get payments
• Following up over and again with approvers to get invoice approval
• Pursuing lost desk work
• Physically entering information, including invoices, and mentioning missing tax data from sellers.
These difficulties in the role of the accounts payable department can be effectively defeated through AP automation to arrive at accounts payable department objectives and targets.
New elements of the accounts payable department incorporate observing the RPA and payables processes and examining information to recommend expected cost reserve funds. The time and cost savings will persuade finance and bookkeeping.
AP automation advantages for the role of the accounts payable department
• Time savings incorporate not accommodating accounts payable to the organization's accounting report (a general record)
• Shutting the books quicker
• Positive programming venture return for capital invested
• CFO will save time on seller receipt payment endorsements and further develop income management
How can AP automation help your accounts payable department?
1. Gets you better control and improves accuracy
AP staff frequently went through hours on invoice handling from social affairs and documenting desk work, confirming receipt precision, acquiring endorsement from the right individual, composing checks, guaranteeing invoices are not duplicates, and payments are made on time.
Accounts payable automation unifies all desk work and correspondences into one string. Invoices are consequently captured, approvals are smoothed out (and robotized), and administrative work is decreased to almost nothing.
In short, automation is replacing the role of the accounts payable department.
2. Free up the AP team to attend to high-priority tasks
Humans are inclined to commit errors. Numbers get rendered, invoices get lost, duplicate receipts are handled for payment, and afterward, are paid.
AP automation makes the task simpler by proposing approvers, sending updates for late payments, and, surprisingly, hailing irregularities that, in any case, would have fallen through.
This permits the accounts payable department to function on additional essential endeavors, for example, working with sellers to track down additional pleasing terms.
3. Further developed Merchant and Client Experience
Smoothing out the AP cycle through automation makes it far more straightforward to guarantee payments are made on time.
Convenient endorsement and on-time, or even early payment, lessen provider chance and assists your organization in fabricating more grounded affinities with your vendors.
Dealing with the functions of accounts payable department through the execution of AP automation programming is a little test. You're en route to accomplishing significant expense reserve funds and inner control upgrades for your business.
An effective and efficient accounts payable department is a basic resource for any business. With a lot of data moving through the department, and thus numerous monetary commitments joined to that information, a decent design is fundamental.
An automated accounts payable system with numerous more benefits than just streamlined invoice processing and vendor payments is Volopay.
Volopay is the best spend management platform that caters to all the financial needs of a business. From corporate cards to extensive accounting data processing and recording, it can do everything.
With Volopay, you give your business the opportunity to grow and flourish with features like direct accounting integration, lowest FX rates on international payments, OCR for invoice scanning, a reimbursement model, corporate cards, and more.
The accounts payable department's three greatest areas of responsibility are:
1. Keeping track of what an association owes to vendors.
2. Make sure that the payments to the vendors are approved on time.
3. Payment processing.
The essential Accounts payable department function goes this way: The AP representative gets the receipt. The agent physically enters the information and checks the receipt against the purchase request and applicable general ledger (GL) account. The agent courses the receipt for endorsement. When supported, the agent initiates payment against the invoice.
Automating the AP cycle shields against fraud by making audit trails, segregation of obligations, and reconciliation with acquisition frameworks that guarantee three-way coordination and buying strategies compliance.
No, most of the accounts payable departments have shifted towards automation software to match invoices. The manual invoicing process is hectic for the employees.
The accounts payable department is liable for precisely following what's owed to providers, guaranteeing payments are appropriately approved, and handling payments.