Accounts payable services are a part of accounting services that refer to the debt that businesses owe to creditors for goods or services received on credit. AP appears as a short-term liability on the company’s general ledger (GL) and indicates the amount of money needs to be paid to a vendor within a specific time.
If left unpaid, it can cause disruption in cash flow and the business may even be charged with penalties. To avoid such situations, you can choose to hire an outsourced accounts payable and request their services.
What are the duties of an account payable?
An AP service provider can carry out various tasks. They are capable of:
- Reviewing invoices to check which one needs to be paid
- Keeping invoices organized
- Reconciling bank statements often
- Checking vendor files for past payments
- Obtaining information of invoice payments
- Reporting sales tax
- Verifying vendor accounts
What are the functions of accounts payable?
When you choose to outsource accounts payable process, you get to understand that an AP expert can handle a variety of tasks. Some of the accounts payable services offered by them are:
- Vendor payments
- Matching invoices
- Bank reconciliation
- Processing invoices
- Clarifying invoice data
1. Vendor payments
AP department handles your vendors and maintains a proper vendor relationship. This aspect of accounting service also includes paying vendors on time. Accounts payable service providers pay vendors and suppliers timely which contributes to a healthier vendor relationship.
2. Matching invoices
While matching invoices, the account payable service provider has to make sure that both the invoice by vendor and the information collected by business are same. The AP department has to perform this task quite carefully or they might end up making errors, leading to financial loss.
3. Bank reconciliation
Bank reconciliation helps in figuring out any discrepancies between the bank’s financial statements and the internal documents. With frequent reconciliation, the accountant can identify and rectify those errors.
4. Processing invoices
Invoice processing is also an important function that APs perform. Since this task is quite time-consuming, an accounts payable service provider would most likely automate it.
5. Clarifying invoice data
One of the accounting services is to make sure that the invoice data is accurate. They do so by clarifying prices, and any items associated with the invoice. The overall aim of this process is to make sure the receipt by vendors is paid and that the business benefited from the invoice.
Perks of Outsourcing Accounts Payable Services
There are many reasons as to why a business would want to outsource accounts payable process. It would help the workload off of the in-house team and offer them some concession and time to focus on other tasks. Further, the business owner would benefit from frequent reporting on what’s going on in the business.
Some other advantages of accounts payable services are:
- More work, less cost: Accounting service providers, such as accounts payable, offer to complete more work while charging relatively less money than an in-house accountant.
- Dedicated experts: These experts can offer your business undivided attention and services that match your business requirements.
- Cost Savings: When you are outsourcing any function or process, you won’t be charged as if you are hiring an employee. Rather, just pay for the services you require, which will not cost you much.
- Enhanced Efficiency: Accounting service providers are professionals are they do not need any additional training to work. You could just contact outsourced accounts payable service providers and have them get down to business.
- Better Tools & Resources: Accounting services providers have access to the latest technology and tools that can enhance your finances a lot more.
- Real-time Data: One of the biggest benefits of hiring an accounts payable service provider is that they offer real-time data. This means you won’t have to worry about frequent reports of the business’s financial health, since they would offer it themselves.
Accounts Payable Process
The accounts payable process consists of a few steps, which are:
- Receive invoice
- Invoice gets approved
- Payment authorization required
- Payment processing
- Bank reconciliation
Step 1. Receive invoice
The company receives an invoice from a vendor, but the invoice is received via email, fax, or through another way. Now, it needs to be added to an ERP system. The accounts payable would check it against the purchase order.
Step 2. Invoice gets approved
After checking the invoice and the purchase order, and if everything is alright, the invoice will get the green flag for being processed. Instead of reconciling these payments manually, the whole process can be automated and save a lot of time. An automated process would also reduce errors.
Step 3. Payment authorization required
After the invoice gets approved, the payment needs to be processed. The authorized person needs to approve the payment for it to get processed.
Step 4. Payment processing
The approved invoice’s payment gets processed.
Step 5. Bank reconciliation
Once the payment gets processed, it needs to be checked against the bank statements.
Conclusion
Account payable services are one of the most vital parts of accounting services. AP processes should mostly be automated, to avoid human errors and expedite the whole process. Whiz Consulting has been one of the most reliable accounts payable service providers and we have been serving our clientele for the past 10 years. Over the years we have won the trust of thousands of clients and hope to offer reliable services to many more. Are you looking for automated accounting services? Give us a call today.
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