In accounting, there are accounts receivable and accounts payable. This time, we will look at the meaning and function of a payable account.
Accounts payable relates to debt owned by a company. Usually, this is related to the purchase transaction made. For this reason, companies need to pay off existing debts so that they are not burdened. That way, it is important for everyone to know which can be seen in more detail through the explanation below.
What you need to know about a payable account
Accounts payable are the obligations of a company to other parties within a certain period of time. This usually occurs when there is a purchase transaction made by the company and paid on credit.
In addition, an account payable can occur when a company makes a purchase with a down payment or down payment or payment before the goods are received. Usually, this is often the case for:
- Companies in the field of trading on the purchase of finished goods.
- Companies in industry or factories purchase raw materials for production.
A new payable account will be recorded not when the item is ordered but when the item has been received by the buyer. If there is a cash discount, it must be written in the number that has been deducted by the cash discount.
The role of account payable staff in managing it
In a company, account payable staff are in charge of taking care of this. They are tasked with coordinating with related parties to collect information regarding purchase transactions, record and pay them off. The following details the tasks performed by account payable staff.
- Coordination with related staff
- The purchasing process carried out by the company is usually related to many parties from the marketing, purchasing, sales, storing, and other divisions. Account payable staff must coordinate with related parties to find out the existence of goods.
- Checking of purchasing activity
- After the Purchase order is approved, the AP staff needs to re-check the PO before being forwarded to purchasing. That way, this can minimize the occurrence of errors that can harm the company.
- Doing records and payments
- AP staff is responsible for recording all transactions that occur. After that, it will be kept for bookkeeping and payment matters. Payments are made based on an agreement between the company and the vendor.
The importance of checking accounts payable regularly
Through the explanation above, you have understood the definition and importance of a payable account in a transaction. To reduce the burden, the company needs to check the existing debt and make payments as soon as the goods are received.
Sometimes, recording errors or existing data are often lost and slow down the payment process. In addition, this can also potentially worsen the relationship between you and the vendor.
Therefore, companies need to implement an efficient and tactical processing system so that the process runs quickly and with minimal errors. This can be achieved by adopting technology in your company’s work processes. Have trouble choosing the right accounts payable software? Use Medius to make your company’s procure-to-pay process simpler, faster, and less error-prone. Find out how Medius can help maximize your company’s Accounts payable automation work process by clicking the link on this blog!