Every company or business, small or large, has to maintain a general ledger that contains crucial information about the expenditures and earnings made in a week, month, or year. A section of the same general ledger that accounts for entities towards whom the company has an obligation of repaying a short-term loan, is called the accounts payable section.
When you extrapolate the same in terms of a functional unit of the organization, the accounts payable section of the company is the one that deals with making payments owed by the company to its clients, suppliers, etc. In this article, let us try and understand the accounts payable process and the need for it to become more and more automated.
The data for accounts payable process, as well as receivable process, is extremely crucial for the accounting department of any company. The accounts payable is a representation of the company’s liabilities, simply the money that it owes to its suppliers, clients, customers, etc. On the other hand, the money that is owed to the organization by its customers or anybody else who has availed their products or services is represented by the accounts receivables. Since the accounts receivable data ultimately translates into the amount of money that the company will earn, it is duly considered as an asset.
Accounts Payable Process Steps
The following steps are involved in the accounts payable workflow. You can search for a accounts payable process flow chart as well:
1. Preparing Charts for Accounts
Preparing a chart of accounts is quite understandably the first step in the accounts payable workflow. A chart of accounts is a tabular representation of all the accounts with which the company deals. Since these accounts will also include the accounts payable, it will always be beneficial to start off from this point.
2. Noting Down Vendor Details
Since the accounts payables are the ones showing the data about the money that you owe to vendors, you will first have to set up vendor details in your database. This is particularly true for businesses that have just started out because without knowing the details of the vendors, you do not get a starting point to initiate the payments. Different companies may use different software like spreadsheets or accounting software for this purpose. Whatever be the methodology, this needs to be the second step in the workflow.
3. Looking At The Invoice Details
The vendors will have to present an invoice before the company to claim a pending payment. This invoice is nothing but the bill containing details of the services used and the net amount which has to be paid. Invoices are made by different companies in different formats, and therefore, processing and extracting information out of these invoices is usually a very time-consuming affair. Nevertheless, clerks in companies take up this task and go through the invoices to check and recheck the details before payment is made.
4. Processing The Payments
Reviewing and rechecking the account’s payables every week is recommended for every business. Even businesses that are using automated accounting software for this purpose, reviewing the due dates for due payments should always be a priority. When the review is completed, the payment has to be initiated based on the data present in the invoice. Now the payment can be done by writing checks or can even be done through automated online payments depending on the provisions of the accounting software.
Problems in Invoice Processing in Accounts Payable Process
The whole invoice processing workflow is centered around the invoice processing stage. In modern times, invoice processing is an automated routine task completed using software and bots. However, invoice processing software is traditionally a source of errors also. Furthermore, traditional invoice processing software is highly dependent on formats and templates. Since every company or vendor provides invoices in a template suitable to them, this poses a big problem when it comes to automating the processing phase.
KlearStack Way Of Invoice Processing and Accounts payable process
Managing the accounts payable process has been completely transformed by KlearStack with our modern and advanced optical character recognition software. Users get to scan and extract data from invoices made in any template whatsoever. Doing away with the challenges of any traditional OCR software, our tool is capable of converting the text in all sorts of invoices into a digitally usable form without any errors.
Our machine learning models generalize very well for several different verticals. With experience in supporting invoice processing in accounts payable in sectors like banking, finance, hospitality, insurance, etc., our AI-based OCR software has been tested very extensively. To make use of this advanced OCR software for accounts payable process automation, contact KlearStack today.