Companies and businesses have huge transactions pertaining to their accounts payable process. They receive goods and services from various suppliers and they need to manage timely payments to these creditors to avoid default and adhere to the payment terms.
“Accounts Payable” is used as a generic term to represent various different things related to AP process. Some of the common usage of the term is:
Accounting Entry: As explained before “Accounts Payable” refers to the accounting entry that indicates a short term liability payable to the supplier of goods and services for the goods supplied or services rendered. It is a short term liability and categorized as Current Liabilities under the balance sheet head “Liabilities”.
Accounts Payable Sub Ledger: Companies and businesses have huge transactions pertaining to their accounts payable process. They receive goods and services from various suppliers and they need to manage timely payments to these creditors to avoid default and adhere to the payment terms. They use a subsidiary ledger generally referred to as “Accounts Payable Sub Ledger” and sometimes just as “Accounts Payable”.
Accounts Payable Process: Accounts Payable term is also used to refer to the accounts payable process. This process involves receiving the goods or services, verifying the quantity and quality with the Supplier Invoice and releasing the payment as per the agreed payment terms.
Accounts Payables Department: As companies have large number of transactions related to AP Process, hence many a times they need a separate division, branch or department to manage and handle all the AP related transactions. That department is referred to as Accounts Payable Department and sometimes just as Accounts Payables.
Eventually once we understand the accounts payable process and what are its elements we can easily understand what is being referred to at any point in time.
In the normal course of business, customers are likely to return orders from time to time due to various reasons and business should design processes the manage and accept such returns. A well designed returns management process can reduce costs and issues associated with returns or exchanges.
Subsidiary Ledgers – AP Ledger
An accounts payable invoice gets recorded in the Account Payable sub-ledger at the time an invoice is received and validated that the respective goods corresponding to the invoice have been received. Then it is verified and vouchered for payment as per the payment terms agreed with the Supplier.
Accounts Payable Journal Entry
Although in the large organizations the Procure to Pay Accounting process starts when the purchase order for supply of goods is released to the supplier. To keep things simple in the beginning we will discuss the core accounting entries related to the Accounts Payables process.
The Outbound process starts with routing the shipments. The Outbound execution process starts from the point when pick tasks are completed for an outbound shipment and ends at the point where the outbound packages are loaded into trailers. The Warehouse Outbound process includes managing and controlling outgoing materials starting from the download of orders through to the shipping of products from the warehouse.
Business Case of Multiple Warehouses
Adding extra warehouses to business provides many benefits such as reducing shipping costs, increasing storage capacity, and having warehouses for specific purposes to simplify overall warehouse management. Multiple warehouses allow you to organize your inventory in a way that helps your business be more effective.
One of the warehousing best practices that retailers like Walmart, Amazon, and Target have adopted is known as cross-docking. During this process the inbound products are unloaded at a distribution center and then sorted by destination, and eventually reloaded onto outbound trucks. In real parlance, the goods are not at all warehoused but just moved across the dock (hence the name).
Companies and businesses have huge transactions pertaining to their accounts payable process. They receive goods and services from various suppliers and they need to manage timely payments to these creditors to avoid default and adhere to the payment terms.
This article discusses the documents that gets generated during the procure to pay process. Undestand why these documents are created, what is their business significance and how they are handled and generated using ERP or automated systems.
Transport operations are often divided into full load and part load and due to economies of scale, the unit costs are higher for part loads. Our customer needs several part loads delivering, so it can reduce costs by consolidating these into full loads. Then it gets all the part loads delivered to a warehouse near the suppliers, consolidates them into full loads, and pays the lower costs of full-load transport to its operations.
When products arrive at a facility, there need to be a defined process to let them in. The process for accepting inventory when it arrives is called "Receiving". Any warehousing operation must be able to receive inventory or freight from trucks at loading docks and then stow them away in a storage location. Receiving often involves scheduling appointments for deliveries to occur, along with unloading the goods and performing a quality inspection.
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