Accounts Payable is a part of Accounting, where payable of an organization are managed. The accounts payable include a different team to organize and manage these payable. It is an important function since it decides on outflow of company resources and cash management.
Accounts Payable Team has the various responsibilities like payment to vendors, Payment of taxes, statutory dues etc. They not only ensure the timely payment of these transactions but also make sure that full advantage of credit period is also taken.
The major responsibilities of accounts payable team is vendor payment. Vendors are the supplier of goods & other assets to the organizations. When a organization purchase goods/materials from suppliers, the supplier accounts is credited and Goods account is debited.
The Accounts Payable team needs to check on daily basis the credit period and due dates of payment of these vendors. They need to arrange finance for theses payment and also handle the calls & queries of vendors.
Before making payment they need to investigate various documents Like:-
- Purchase order for the goods purchased
- Requisitions slip from particular department requiring the material
- Invoice of the supplier
- Any contract and agreement with the supplier to check term of payments
- Approval from purchase department to make payment or less payment may be due to defective inventory etc.
They manage resources in way that total cost of capital does not increase the interest and penalty levied on late payment of these vendors. For example, if I need to pay Rs. 2 lac to a vendor today and if I fail I will have to pay interest @ 3% per month. And if I borrow the same amount from market it will cost me 2% p.m. So I am in loss of 1% p.m if I do not pay to the vendor on time.
The accounts Payable team also co-ordinates with other accounts teams like for sufficient balance in the accounts at the due date of payment. These confirmations are taken from the accounts receivable team, who manage the receivables of an organization.
There are different software for due date reminder and interest calculation. You can also use Excel Sheet to make a list of all payable and their due dates.
Role of Accounts Payable team with accounts entries
After making payment they need to ensure that payment entries are accurately posted to the ledger of the vendor and his balance is reduced by that amount.
They need to provide for all accrued expenses on timely basis. There may be expense like telephone expense which has not become due but It should be recorded in books on accrual basis for correct accounting results.
Please comment for any query on Accounts Payable.