Account payable is a term that we often hear in the accounting world. However, there are still many of us who still do not understand the word. Especially for accountants, Account Payable is a mandatory science for them to learn to manage company finances for the better, and also you can use finance software to manage account payable.
This article will discuss more accounts payable, ranging from understanding important roles to discussing the responsibilities of account payable staff. Check out the discussion of the following article for further explanation.
Table of Content:
Table of Content
Understanding Accounts Payable
Accounts payable or also commonly known by many people as accounts payable. Accounts Payable (AP) is the company’s obligation to other parties that they must immediately fulfill within a certain period.
Another explanation of trade payables is that the company has a debt obligation. According to the creditor and company agreement, they must pay it off before maturity.
This payment obligation occurs because the company buys credit from other parties to re-sell merchandise to consumers. Not only that, but trade payables can also happen due to a purchase using an advance payment and payments made before the goods are received (cash before delivery). Usually, companies that carry out these two systems buy and sell ready-made products and industrial companies.
Critical Role of Accounts Payable
Accounts payable plays a crucial role in a company. This position needs to be checked regularly to know and understand the responsibilities that must be completed, namely, paying and paying off the remaining debt.
Its primary function is so that debt does not accumulate and makes the company suffer many losses. When the company has received the goods, it would be nice if its debt had not been paid for them to pay off immediately. In addition to lightening the burden, the business process with the client will always be smooth.
Of course, every job position often makes mistakes, especially for a payable account. A few fatal errors can worsen the company’s situation, such as experiencing losses and disrupting client relations.
However, in this digital era, an accounting application is now available to help with various company accounting jobs. The aim is to lighten accountants’ work, provide maximum results, and avoid human error.
Account Payable Staff Duties
A large company usually has a particular staff who manages accounts payable.
In contrast to small companies, they also leave this work to the company accountant. The following are five tasks that the account team usually does, namely:
Coordinate with the supply chain
The company conducts transactions with external parties, so it will usually involve many parties. The parties involved are sales, vendor, purchasing, production, and warehouse divisions. Therefore, staff must coordinate with all these parties. It can also be used as a supply chain management system.
Coordination is essential for the company to ensure the purchase goes according to plan. In addition, account payable staff must also understand the supply chain cycle to ensure that the goods purchased by the company have arrived at their destination safely.
Analyzing purchasing activities
Each transaction is usually recorded in a document. However, sometimes, there are small to large recording errors in the document. Of course, this is natural because humans do it. Therefore, account payable staff must check all documents to avoid mistakes that harm many parties.
Recording purchasing activities
Account Payable staff also has another task: recording all purchasing activities. This step is intended as a verification effort if there is a discrepancy between the data in the document and the facts on the ground.
Make payments for purchases that are already valid
After the purchase has been approved by the vendor, the account payable staff is in charge of making payments. There are three types of payments:
- Cash After Delivery (CAD): It occurs when the vendor sends all goods to the company, and then the company pays them in cash.
- Cash Before Delivery (CBD): The company must make all payments before the vendor delivers the goods.
- Two-stage payment: In the first stage, the company, through its staff, makes a down payment (DP). After that, the company returns to make payments until it is paid off.
Compile reports and purchase balances
Account payable staff’s duties include recording and creating reports. The staff will submit this report to the superior, who can be a manager or supervisor.
Account Payable Staff Responsibilities
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There are still several responsibilities that account payable staff must carry out. The following are their responsibilities:
- Supervise and ensure that the company’s cash flow is normal and balanced. This is realized by carrying out the earliest task and coordinating with all relevant staff.
- Archive all documents related to purchases made by the company. Staff also need to check all archives.
- Responsible for payments that are the company’s obligations, this AP staff also conducts discussions and agreements with vendors to determine a payment system that is beneficial for both parties.
- Make a purchase report that the company has carried out within a certain period, which is the responsibility of a staff member to a supervisor or manager. Generally, this purchase report is created monthly and weekly.
The Difference with Account Receivable (AR)
Quite different from accounts payable, Accounts receivable is a record of transactions on which we receive money. Many people also know AR as accounts receivable. Accounts receivable is a transaction that defines billing to consumers already in debt. The parties who give debt to this company vary from individuals to companies or organizations.
There are three main characteristics of receivables:
Maturity Value
is the primary transaction value plus interest. This payment is due to give rise to what is called interest.
Due Date
The due date in the account receivable is the day of payment on which the company must collect obligations from other parties. The company will usually apply a fine system if there is a delay.
Maturity Age Maturity
in a collection of receivables, divided into monthly and daily. If a receivable uses a monthly calculation, then the due date is the same as when the receivables occur in the following month.
To streamline and manage these processes efficiently, businesses often use accounts receivable automation software. This software automates invoicing, payment reminders, and reconciliation processes, reducing manual effort and errors.
Conclusion
That’s an explanation of account payable. Account payable staff need to perform many important tasks. To achieve maximum results, an AP officer must understand his profession well.
To avoid miscalculation, don’t forget to Get a full-fledged Accounting System with robust features to manage your finances, such as cash flow management, journal entries, and reconciliation. So, try the free demo today!
