What's the Accounts Payable Process Designed for Rose Enterprises?
Assuming that the goods ordered from a supplier are received, the accounts payable is established by the following steps:
The validation of vendors’ invoices is done after receiving the invoices from the vendor. A vendor’s invoice is a business document that notifies the purchaser of an obligation to pay the vendor for goods that were ordered by and shipped to the purchaser. To follow the flow, let us label the validation of vendors’ invoices as process no. 1. Under process no.1, there are two important steps to follow: The two steps are named process 1.1 and 1.2.
Process 1.1 comprises a number of steps: Upon the receipt of the vendor invoice, it is matched against the vendor database to determine that the invoice is from an authorized vendor. The invoice is compared against the purchase order database to make sure that there is a P.O and that the invoiced items, quantities, and prices conform to the purchase order. Then, the invoice is matched against the receiving report data to determine that the items and quantities that have been received are the items that were ordered and supported by a purchase order. The authorization of the purchase can be verified from the purchase order document. Finally, the invoice is checked for accuracy for items, computed discounts, if any, extensions of figures, and the total amount due. At this point, the vendor database is updated to reflect purchase history data.
If the data items--the items themselves, quantities, and prices--do not agree, the invoice is rejected and follow-up procedures are initiated. If the items agree, the invoice is approved, and the validated invoice is sent on to the next step (1.2) to record the payable.
If we have the SAP (Systems Applications and Products) system, just like what Rose has installed, we may open the window where the purchase order data is displayed. A match is performed for invoice verification to determine that the purchase order, goods receipt, and invoice all match within the tolerance chosen by the user.
The accounts payable process can be continued with the payment process wherein fraud might be possible. Rose Enterprise’s payment process begins with the preparation of a list of payments that might be made at this time. The selection of this list is based on payment due dates and terms that may indicate that a discount can be taken for a payment at this time. The list should be reviewed and amended, if possible, for additional invoices that are not due for payment that can be made with other payments to a vendor.
Please turn to Page 3 for more on the accounts payable process.