What is the process life cycle of the accounts payable process?

Accounts payable is one of the important aspects of the accounting of any business. If the account payable process is not handled properly then it can impact the revenue of the business and improper financial management. Proper tracking of different elements in them is important to bring efficiency to accounting. The accounts payables management in India has to be managed in a proper way that can improve accounting efficiency.

What is the accounts payable process?

Accounts payable process is the ‘Procure to Pay’ process series that involves the payments department of the company and purchase. It involves all the activities till making the final payments to the suppliers.

What is the process life cycle of the accounts payable process?

The accounts payable has a series of activities that need to be done step-wise till the final payments.

Here is the life cycle of the accounts payable process:

1. Identification of the required goods

The requirement of the materials is identified here which is required for the business production. This requirement is then informed to the purchasing department of the company.

2. Dealing with the supplier

After understanding the requirement, proper checking of the order is done by the purchasing department for the supplier. The supplier choice will depend on different factors like locality, price, credit, transportation convenience, etc. Generally, the company will deal with the old vendors with whom they have been dealing regularly. If there is a new vendor then a proper quotation about the quantity and prices is given to them.

3. Issuing the purchase order to the supplier

After vendor selection, the proper purchase order is created with their name. The negotiated price and quantity of material are then put along with the terms and conditions.

4. Receipt of Goods

After receiving the goods from suppliers, the transportation of the goods is done. The goods delivery is prepared by considering the goods requisition note (GRN).

5. Ensure the received items are as per requirement

A proper quantity and quality check of the goods is done to ensure that there is no defective product. An ordered match is then done for checking the proper quantity is delivered.

6. Receive Supplier Invoice

The supplier invoice is then received where the quantity and the amount are mentioned properly. Along with them the tax applicable is also mentioned which needs to be paid.

7. Verify the Invoice as per the purchase order

The invoice is matched properly before making further payments. It is only after proper invoice matching the payments is done further.

8. Entry of Invoice into the system

After the completion of the proper steps, the invoice details are then put in the ledger accounts. Proper information about the rate, payment due, rate, and quantity is done.

9. Making proper invoices for payments

Before the arrival of the due date, the required payments are then processed. The payment can be made through any mode as per the terms and conditions mentioned.

 These are the general process life cycle of the accounts payable process. If you find it difficult to do account payable management service in your organization then you can outsource this task. It can help you to manage the whole process properly. You can look for a reputable agency to outsource accounts payable services. It can relieve you from this complex task to achieve better efficiency in the account payable process.

Accounts Junction provides account payable management services to the businesses. They have experts to handle your accounts payable to maintain resonance with your accounting. After you outsource accounts payable services at Accounts Junction, you can experience great relief from this complex task. Accounts Junction is a well-known accounting service providing agency around the globe.