Accounts Payable Hub

The term “account receivable” is when a business allows a customer to take immediate possession of a product/service, in return for a promise to pay.

Trade credit is a seller providing short-term business credit terms to a buyer (without charging interest) in a business transaction for the sale of goods or services. The supplier bills the customer using invoices to be paid within a stated number of days and records accounts receivable until receiving a cash payment. 

If you are comparing a quote to an invoice, a lot of the information will be the same. The timing is typically the only thing that differs. Both documents are legally binding with the same agenda—to bring money in the door.

The accounts receivable turnover ratio is a simple metric that is used to measure how effective a business is at collecting debt and extending credit. It is calculated by dividing net credit sales by average accounts receivable. The higher the ratio, the better the business is at managing customer credit.

The beginning of the procure-to-pay accounting process starts with planning. Here are the ten most common stages of the procurement process:

Assessing accounts payable vs. notes payable isn’t an apples-to-apples comparison. Accounts payable is much more complex, involving many linked tasks and related business documents to enable accurate and timely payments and help optimize working capital. Notes payable focus is the payment of loan principal and interest for large company purchases.

The accounts receivable process refers to the collection, management, and monitoring of all outstanding invoices a company has from extending credit to customers. It delivers cash to a business, strengthens consumer relationships, streamlines the supply chain, and leverages growth.

The full cycle of accounts receivable starts at the sale and delivery of a product and/or service to a customer. It ends when that customer is invoiced and pays the amount owed. Everything in between is important in the process of ensuring you get paid, on time, with a healthy inflow of cash.

Account reconciliation is the process of comparing general ledger accounts for the balance sheet with supporting documents like bank statements, sub-ledgers, and other underlying transaction details. If the ending balances don’t match, accountants investigate the cause of the discrepancies and make adjusting entries required to resolve differences from errors or missing transactions.

Purchase orders from the buyer’s procurement department and invoices from the vendor’s billing department have similarities and differences.  know the basics of what they are and the difference between a purchase order and an invoice. 

SAP functional modules are used to process transactions and reports in a business area of the company.  Here is the list of the main SAP ERP functional modules that are in demand from users

Small business accounting software helps an AP department reduce the time spent on manual data entry through integration and automation technologies. A business syncs bank accounts, credit cards, and other third-party apps with the software. The data is then processed according to custom settings.

Source to pay (S2P) is a business process that obtains services or raw materials from suppliers using strategic sourcing and concludes with the payment for those goods and services via the accounts payable office. Procure to pay (P2P) is a similar process that doesn’t use strategic sourcing.

eSourcing is a series of automated pre-procurement processes using an Internet-based software system to identify, evaluate, compare, and select vendors for purchases. eSourcing handles the collection and storage of quotations, proposals, bids, order negotiation, contract management, and online collaboration through a portal. eSourcing software performs spend management and analysis.

Outsource your accounts payable department. Companies that prioritize accounts payable use automated systems and research-proven best practices to deliver satisfactory and timely payments every single time.

Expense management is a system of business processes ranging from establishing company policies, having employees submit electronic receipts, issuing corporate credit cards to employees for routine purchases, generating exceptions reports, routing expense payment requests to approvers, controlling expenditures, and making payments to reimburse employees for approved expenses.

Procurement is all about long-term goals that contribute to achieving strategic outcomes and competitive advantage. Purchasing has short-term goals. The purpose of purchasing is to arrange business spending and acquire a specific resource.

As the name implies, this is the complete cycle an accounts payable department goes through to finish the job. Many articles surrounding this topic will only mention the end stages of the process, but the entire cycle actually begins when searching for something to buy. 

The order-to-cash process (also called O2C or OTC) refers to the entirety of a company’s ordering system. It starts the moment a customer places an order and ends when an invoice is paid and settled.

Retail ERP is a real-time software system to streamline, automate and manage front-end and back-office business processes. Retail ERP handles omnichannel point of sale (POS system), CRM, supply chain management, inventory management, pricing, sales order management, payments, sales receipts, and financial management for business transactions. ERP means enterprise resource planning. 

Bank reconciliation accounting is performed by the accounts payable department. It’s a means of comparing bank statements against a company’s personal records to spot any discrepancies, mistakes, cash manipulations, or fraudulent charges.

Finance automation involves automating specific manual tasks which can be performed cheaper, and more efficiently, with artificial intelligence. It encompasses setting up a series of jobs (called workflows) and using technology to trigger pre-defined steps. This means aspects of the accounting process can be entirely handled without human intervention. 

An important part of running any business is understanding the basic terminology behind operations. When it comes to accounting, two important terms that are often confused are “sales order” and “invoice”.