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WHAT ARE ACCOUNTS PAYABLE INVOICE PROCESSING

Posted by : Whiz jackjohnusa90@gmail.com on Sep 08,2022 04:37 PM
WHAT ARE ACCOUNTS PAYABLE INVOICE PROCESSING

Invoice processing is the process of assigning an invoice to a specific supplier/vendor and issuing an invoice accordingly. It is a key feature of any company’s bill payment system because it prevents double-spending on invoices. This article explains everything you need to know about accounts payable invoice processing. Keep reading to discover how it can help your business grow, expand and succeed.

What Is Accounts Payable Invoice Processing?

Accounts payable invoice processing is collecting the money owed on an invoiced item as soon as possible after it is due. This can be a monthly invoice or an annual one. When you process payments annually, it’s common to have many separate invoices from multiple suppliers. Once you add up all the separate invoices and their associated refunds, you’ll quickly discover insufficient money in the company bank account to cover them all. However, the leftovers need to be paid immediately so your business can start investing in things like expansion and equipment purchases sooner rather than later. It might seem like a small thing to pay invoices immediately, but if you look at it from another angle, it can be quite liberating because it relieves pressure and makes payments more fun!

What are the benefits of accounting for payments on an invoice?

Account Payable Invoices can help you collect payments faster as they require less paperwork and are recorded electronically. This alone can have a significant impact on your cash flow. However, additional benefits come from recording payments on an invoice. These include the following: 

Forecast cash flows

Knowing at what stage in your business your cash is, helps forecast your cash flow. You can then take steps to mitigate risks and improve your financial health. 

Accessible payments

It is much easier to track payments on an invoice when your company has a system that automatically assigns them a due date. This way, if you fall behind on your obligations, you can easily chase down the responsible parties and make sure they pay their due. 

Improve control of payments

Having a process that automatically prepares and records payments on your invoices can help you improve your control of payments. 

When to process payments on an invoiced item

When you have an invoiced item you need to pay, the method depends on your circumstances. When you receive a bill, you can pay it or negotiate a lower amount. If you pay the bill, there’s no other process necessary. But if you want to negotiate a lower amount, you need to write the vendor a letter and include a description of the item, the value, and the date you bought it. This is known as a bill of exchange and is a formal method of exchanging cash for goods. If the matter still isn’t solved to your satisfaction, you can bring it to a neutral party’s attention. This dispute can be resolved amicably, or you can bring it to a billing dispute or collection hearing.

Wrapping up - Should you process your invoices?

Accounts payable is a process a business must manage, whether in-house or with the help of outsourced accounting services for small business. The key here is to be as clear and specific as possible with your accounting process. Be aware of the costs and consequences of not following it. Paying bills is a necessary evil in business - but when done correctly, it can be one of the most enjoyable aspects of your job. If you’re not willing to put in the effort to be accurate, then you might as well forget about it. But if you’re willing to take the time to follow all the processes laid out for you, then you’ll be surprised by how much more effective your invoices will be.

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