What is Accounts Payable

Accounts Payable

The job of accounts payable is to manage existing and new accounts payable. In addition to recording the personal and company data of the vendors, the type of business relationship, the invoice master, as well as individual receivables are noted in the bookkeeping in order to settle or evaluate them later. Double-entry bookkeeping is used to manage incoming invoices with credit balances.

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Establishment and tasks of accounts payable

Accounts payable is a subsidiary branch of financial accounting. This does not have to be separate in terms of personnel or space, but is usually shown individually in the various software solutions. Separate databases with the master data of the respective creditors are created and maintained here for the administration of debtors and creditors. The tasks within the administration of the accounts payable range from the registration of new accounts payable up to the creation of payment instructions and standing orders. In this way, the company always has an overview of outstanding receivables and the connections between the accounts payable and the purchasing department. In order to later transfer the data of all orders and accounts to the general ledger, it is necessary to set up a reconciliation account. In accounting, in particular, it is important to have an accurate picture of all liabilities to vendors and accounts receivable and to be able to display and evaluate them at any time.

Areas of work and activity in accounts payable

Accounts payable play an important role for companies in the financing of acquisitions, large projects and new product lines. You entrust the entrepreneur with a loan, which he pays back over a fixed period of time, but can freely dispose of the money during this time. The creditor is therefore also called the creditor and has to rely on the repayment. The accounts payable department manages all of the company's creditors to ensure the payment is made.Banks, investors and individuals can be clearly listed with all liabilities.

Typical accounts payable tasks include:

  • Registering and, if necessary, removing vendors
  • Recording of master, contact and personal data
  • Auditing, submitting and recording invoices
  • Archiving old invoices and data
  • Reporting and evaluation
  • Open item management and closing of credits
  • Instructions for payments and standing orders
  • Communicate with vendors about outstanding receivables
  • Credit dunning
  • Keeping a bank journal
  • Maintenance of the clearing account
  • Monitoring of legal guidelines in the credit area

Continue working with accounts payable reports

The collection of all data relating to accounts payable and receivables can be used for evaluation. By comparing the open item list or the list of accounts payable, the controlling department shows which liabilities exist in which amount for the company. An analysis of the maturity structure can also reveal optimization potential. This can consist, for example, in renegotiating the due date or staking out new planning processes in order to pay off the outstanding loans in a timely manner. Accurate administration of creditors is also essential for providing information to investors or takeovers.