ProConnect Supply Chain Solutions

Process of Accounts Payable (AP)

The accounts payable process or function is immensely important since it involves nearly all of a company’s payments outside of payroll. The accounts payable process might be carried out by an accounts payable department in a large corporation, by a small staff in a medium-sized company, or by a bookkeeper or perhaps the owner in a small business.

Regardless of the company’s size, the mission of accounts payable is to pay only the company’s bills and invoices that are legitimate and accurate. This means that before a vendor’s invoice is entered into the accounting records and scheduled for payment, the invoice must reflect:

• what the company had ordered
• what the company has received
• the proper unit costs, calculations, totals, terms, etc

What is the Accounts Payable Process?

The accounts department will have a set of procedures to follow before making a payment. Set guidelines are essential because of the value and volume of transactions during any period of time.

The process involves:

• Receiving the bill: If the goods were purchased, the invoice helps to trace the quantity of what was received. The validity of the bill can be known during this time too
• Review bill details: Ensure that the bill includes vendor name, authorization, date and matching requirements to the purchase order
• Updating records: Ledger accounts need to be updated based on the received bills and expense entry is usually required.
• Making timely payment: All payments should be processed before or at their due date of the bill, as agreed upon between a vendor and a purchaser. Required documents need to be prepared and verified. Details entered on the cheque, vendor bank account details, payment vouchers, the original bill and purchase order need to be scrutinized. A managerial authorization might be required at this point

The process at ProConnect warehouses is no different but it is well managed

From Warehouse End – The following process is for small and/or regular monthly vendors:

1. New Vendor to be enrolled with Supplier Enrollment Form

2. Vendor code creation in RAMCO systems (after obtaining KYC details from Vendor)

3. KYC Details – are

• Filled Supplier Enrollment Form
• Vendor PAN card
• Vendor GST Certificate copy
• Cancelled Cheque leaf

4. Creating PO for expenses by Warehouse in-charge
5. PO Approval will be flown as per the Matrix set-up in RAMCO
6. Upon PO Approval, GRN will be prepared by Warehouse in-charge and Freeze the movement for further accounting
7. Receipt of Vendor Invoices along with PO & GRN number written on the voucher
8. Marking the date of receipt on top of Voucher by the Regional Accountant
9. Checking the Nature of Expenses raised by Warehouse in-charge
10. Checking the Vendor Status with respect to GST Compliance
11. Submission of Vendor invoices to GST team to know on the filing status of GST Invoice received from Vendor
12. GST Team will confirm the above and put the seal on the reverse side of the invoice (GST Filed)
13. Converting the PO & GRN raised, to SOBI (Supplier Order Base Invoice)
14. Authorisation of SOBI by Regional Supervisor (to whom the Regional Accountant reports)
15. Pay Batch will be created for the Vendor Invoices
16. The Supervisor checks the bank details and generates a file for bank upload
17. Payments and vouchers are kept for Senior Manager approval
18. Upon approval, payment will be authorized on the bank portal by the signatories.

The following process is for Freight Vendors:

1. The vendor will submit the invoices to Warehouse
2. The warehouse will check and send the vendor invoices to HO along with the soft copy details for accounting at HO
3. Upon receipt of invoices, the following will be checked
4. GST Compliance
5. GST Filed status for the invoices received at HO
6. Vendor NDC status has the following process

• The soft copy details will be checked along with provision details
• Any clarification required during the process on the soft copy, the regional accountant will be initiating the mail to the warehouse for getting the details/clarity
• Upon confirmation from Warehouse team, Regional accountant will book the invoices in RAMCO
• Any debits to be charged on supplier invoice will be adjusted and the balance amount will be processed
• A processed invoice will be kept for regional supervisor authorization
• The authorized invoices will be further processed for payment in RAMCO
• Pay Batch will be created for the Vendor Invoices
• The Supervisor check the bank details and generate a file for bank upload
• Payments and vouchers are kept for Senior Manager approval
• Upon approval, payment will be authorized in the bank portal by the signatories

– Vijay Chandrasekaran