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.
The documents that are generated during the accounts payable process are listed below:
Purchase Order:
A purchase order (PO) is a commercial document and first official offer issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services the seller will provide to the buyer. Sending a purchase order to a supplier constitutes a legal offer to buy products or services. Acceptance of a purchase order by a seller usually forms a contract between the buyer and seller, so no contract exists until the purchase order is accepted. It is used to control the purchasing of products and services from external suppliers. Creating a purchase order is typically the first step of the Purchase to pay process in an ERP system.
Invoice
An invoice or bill is a commercial document issued by a seller to a buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer. An invoice indicates the sale transaction only. Payment terms are independent of the invoice and are negotiated by the buyer and the seller. Payment terms are usually included on the invoice. The invoices are received during the buy- to- pay process from the supplier and can be for both the products and the services.
Commercial Invoice
A commercial invoice is a document used in foreign trade. It is used as a customs declaration provided by the person or corporation that is exporting an item across international borders. Although there is no standard format, the document must include a few specific pieces of information such as the parties involved in the shipping transaction, the goods being transported, the country of manufacture, and the Harmonized System codes for those goods. A commercial invoice must also include a statement certifying that the invoice is true, and a signature. A commercial invoice is used to calculate tariffs, international commercial terms (like the Cost in a CIF) and is commonly used for customs purposes.
FIRC - Foreign Inward Remittance Certificate
Foreign Inward Remittance Certificate (FIRC) is a certificate issued by the bank to the account holder as a proof of inward remittance to India. Most of the statutory authorities use this document as a proof that an individual has received a payment in foreign currency from outside the country.
Invoice Voucher
A voucher is an accounting document representing an internal intent to make a payment to an external entity, such as a vendor or service provider. A voucher is produced usually after receiving a vendor invoice, after the invoice is successfully matched to a purchase order. A voucher will contain detailed information regarding the payee, the monetary amount of the payment, a description of the transaction, and more. In accounts payable systems, a process called a "payment run" is executed to generate payments corresponding to the unpaid vouchers. These payments can then be released or held at the discretion of an accounts payable supervisor or the company controller.
Debit Note
A document used by a purchaser to inform a vendor of the quantity and dollar amount of goods being returned, and requesting that the dollar amount be returned to the purchaser. A debit note is often used to return goods on credit. The vendor then issues a credit note to the purchaser indicating that the goods have been received, and that the purchaser will not have to pay for them. This is also referred as "debit memo". Debit note can also be issued for other adjustments like loss in transit, discounts over and above what was agreed or some other transactions, which warrant an adjustment to the invoice.
Excise Duty Challan
Excise duty challan is the documentary evidence of payment of excise duty. Excise duty is payable to authorities and the way typically handled in ERP is by defining tax authority as a Vendor. Hence, this document also becomes part of the buy-to-pay process. An excise or excise tax (sometimes called a duty of excise special tax) is an inland tax on the sale, or production for sale, of specific goods or a tax on a good produced for sale, or sold, within a country or licenses for specific activities. Excises are distinguished from customs duties, which are taxes on importation. Excises are inland taxes, whereas customs duties are border taxes. An excise is considered an indirect tax, meaning that the producer or seller who pays the tax to the government is expected to try to recover or shift the tax by raising the price paid by the buyer. Excises are typically imposed in addition to another indirect tax such as a sales tax or value added tax (VAT). In India, almost all manufactured products are included for excise duty. In India, for getting excise tax, Govt. of India has made Automation of Central excise and service tax with this, manufacturer can easily pay their excise tax online on every 10th of following the month through ER -1.
Service Tax Return & Service Tax Challan
Service Tax is a tax imposed by Government of India on services provided in India. The service provider collects the tax and pays the same to the government. It is charged on all services except the services in the negative list of services. All assesses are required to file a service tax return with the authorities along with copies of tax paid challans. Service Tax is payable to authorities and the way typically handled in ERP is by defining tax authority as a Vendor. Hence, this document also becomes part of the buy-to-pay process.
TDS Return & TDS Challan
TDS is one of the modes of collection of taxes, by which a certain percentage of amounts are deducted by a person at the time of making/crediting certain specific nature of payment to the other person and deducted amount is remitted to the Government account. It is similar to "pay as you earn" scheme also known as Withholding Tax in many other countries, one of the countries is USA. The concept of TDS envisages the principle of "pay as you earn". It facilitates sharing of responsibility of tax collection between the deductor and the tax administration. It ensures regular inflow of cash resources to the Government. It acts as a powerful instrument to prevent tax evasion as well as expands the tax net. Tax must be deducted at the time of payment in cash or cheque or credit to the payee's account whichever is earlier. Credit to payable account or suspense account is also considered to be a credit to payee's account and TDS must be made at the time of such credit. The deductor is the employer in cases where the payments are salaries. A deductor is required to issue a TDS certificate to the deductee within a specified time. Returns should be filed at timely intervals with the tax authorities and return should contain the details of payments done to central government account, for TDS. TDS is payable to authorities and the way typically handled in ERP is by defining tax authority as a Vendor. Hence, this document also becomes part of the buy-to-pay process.
Advance Tax Challan
Under the Income Tax Act, every assessee is required to pay tax in a particular financial year, preceding the assessment year, on an estimated basis. However, if such estimated income is less than 10000, then no advance tax is payable. Advance Tax is payable to authorities and the way typically handled in ERP is by defining tax authority as a Vendor. Hence, this document also becomes part of the buy-to-pay process.
VAT Return and VAT Challan
A value added tax (VAT) is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the value added to a product, material, or service, from an accounting point of view, by this stage of its manufacture or distribution. The manufacturer remits to the government the difference between these two amounts, and retains the rest for themselves to offset the taxes they had previously paid on the inputs. VAT was introduced into the Indian taxation system from 1 April 2005. Of the 28 Indian states, eight did not introduce VAT. Each Indian state has a different sales tax. VAT is payable to authorities and the way typically handled in ERP is by defining tax authority as a Vendor. Hence, this document also becomes part of the buy-to-pay process.
To stay competitive in today’s tough market, the location of your warehouse is vital. To grow retail business need to offer to customers faster and affordable shipping time, which is dependent on the warehousing location as the location of the warehouse affects the transit time to ship orders to customers.
Warehouses may seem like a simple, straightforward concept, but they actually include a variety of different types of warehouses that all have their own niche. The type of warehousing that’s right for you depends on your specific industry, location, and needs. From private warehousing, distribution centers, and climate-controlled warehouses, there’s an option to suit every business.
This article discusses the key documents that gets generated during the import/export process. These documents may apply to both invoice to cash as well as order to cash cycles. Also learn the major custom docments for India.
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 a customer wants a product that has been stored in the warehouse, the same need to be picked off the shelf (or off the floor) and get it ready for shipping. Depending on how big is the warehouse, picking can take a while. (Many distribution centers cover more than 1 million square feet.). Hence, warehouse order picking methods are an important aspect within any warehouse.
Overview of Warehouse Processes
The basic function of a warehouse is to store goods. This means that they receive deliveries from suppliers, do any necessary checking and sorting, store the materials until it is dispatched to customers. Traditionally warehouses were seen as places for the long-term storage of goods. Now organizations want to optimize their customer experience and try to move materials quickly through the supply chain, so the role of warehousing has changed.
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.
Types of Inventory Count Processes
While dealing with lots of inventory in a warehouse, lots of things can go wrong. Shipments may not have the right number of units in them, or they could get damaged somewhere along the supply chain. Discrepancies in the stock may arise as part of every inventory control, and need to be corrected immediately after the inventory control procedure has been finished.
Understand the Accounts Payable process. Understand the AP cycle and the various tasks that need to be completed during AP transaction processing. Learn the key activities and setups that are done in any typical system during the AP processing.
Before shipping, businesses need to make sure that the items will arrive in good condition. Packaging is a form of protection against environmental threats that the product will face from the time it leaves warehouse facility until the time it reached the customer. The packaging is intended to provide protection for the item as it is being handled in the warehouse or when the item is being shipped.
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