The Article & Link of IRRICA.COM

What is AP? PDF Print E-mail
Written by Cecilia Chee, Singapore   
Monday, 03 October 2011 18:55

 

 

Account Payable System (AP)

 

Accounts payable is a file or account sub-ledger that records amounts that a person or company owes to suppliers, but has not paid yet (a form of debt), sometimes referred as trade payables. When an invoice is received, it is added to the file, and then removed when it is paid. Thus, the A/P is a form of credit that suppliers offer to their customers by allowing them to pay for a product or service after it has already been received.

In households, accounts payable are ordinarily bills from the electric company, telephone company, cable television or satellite dish service, newspaper subscription, and other such regular services. Householders usually track and pay on a monthly basis by hand using cheques or credit cards. In a business, there is usually a much broader range of services in the A/P file, and accountants or bookkeepers usually use accounting software to track the flow of money into this liability account when they receive invoices and out of it when they make payments. Increasingly, large firms are using specialized Accounts Payable automation solutions (commonly called ePayables) to automate the paper and manual elements of processing an organization's invoices.

Commonly, a supplier will ship a product, issue an invoice, and collect payment later, which describes a cash conversion cycle, a period of time during which the supplier has already paid for raw materials but hasn't been paid in return by the final customer.

When the invoice is received by the purchaser it is matched to the packing slip and purchase order, and if all is in order, the invoice is paid. This is referred to as the three-way match. The three-way match can slow down the payment process, so the method may be modified. For example, three-way matching may be limited solely to large-value invoices, or the matching is automatically approved if the received quantity is within a certain percentage of the amount authorized in the purchase order

 

 

alt

 

Last Updated on Monday, 03 October 2011 19:37
 
Under Copyright © 2017 www.irrica.com. All Right Reserved By IRRICA Software Team. IRRICA.com is the Web Site provided in all of Software Engineering Development(SED) and all of Enhanced Business Implementation(EBI) for Enterprise Software Industry World.
For more information, please issued your enquiry at e-mail: office@irrica.com