Check Run Process for Accounts Payable

You can automate reconciliation with accounting software to ensure you’re paying vendors on time to avoid late fees. Xero is cloud-based accounting software that offers features for each stage of the accounts payable cycle, including bill payment, purchase order creation, expense tracking, and more. No one wants to be audited, but if you ever are, you’ll have a solid audit trail using accounting software, from initial approval to the final bill payment process. You’ll also be able to generate more accurate financial statements, a must if you’re applying for credit or looking for investors. No more pulling out the checkbook to write checks and then record them for your records. If you use accounting software, you can enter invoice details, the amount due, and the date due, and choose to pay those invoices when the payment is due.

Once you receive an invoice from a vendor or supplier, you or your accounting clerk need to review the bill for accuracy. This can include things like inventory, raw materials, utilities, rent, and other business related expenses. If you pay using a credit card or ACH, you should notify the vendor of the payment. An AP automation solution like MineralTree enables teams to set controls and automatically route invoice approvals to the appropriate reviewer, expediting approvals. In instances where a check amount exceeds a certain threshold, require a second person to sign the check.

Whether you use a manual accounting system or accounting software, you’ll need to review due dates to see which invoices need to be paid. Most businesses have these challenges when tracking accounts payable manually. With accounting software, you can track expenses to ensure your accounts payable process is more accurate. An efficient accounts payable process helps you maintain positive relationships with your suppliers and avoid late fees and penalties. It also ensures you have enough cash flow to meet your other financial obligations. You’ll never have to look up a vendor or supplier address, check on payment terms, or even hand-write checks.

QuickBooks

One workflow enables teams to easily pay vendors in their preferred format, whether that be a virtual card, check, or ACH. Even if your business prefers checks over digital payment methods, there are ways to modernize your documentation processes. An AP automation solution like MineralTree can help further reduce the risk of fraud through positive pay files. When a business sends a check, a file is sent to the bank with the payment details. If something deviates from the positive pay file, banks know that some sort of fraud was attempted. Vendors often send statements to their customers to indicate the amounts (listed by invoice number) that remain unpaid.

Accounts Payable Process

Invoice approval involves reviewing incoming invoices to ensure their legitimacy and accuracy before making a payment. Manual invoice approvals not only make it difficult for your remote teams to chase down signatures, but they also increase the risk of fraud and human error, like issuing duplicate payments. Leveraging automation in this step can significantly improve accuracy and timelines in approving invoices. The AP check run remains a pain point for many finance departments who rely on manual processes and outdated solutions to manage AP — in turn, causing check run delays and hiccups.

1. You will also want to make sure that the invoice number is on any type of remittance in order to ensure your payment is posted properly.
2. Platforms like MineralTree allow teams to schedule payments in advance, even for checks.
3. Zoho offers four pricing plans, ranging from its Basic plan for $9 per month to its Premium subscription, which goes for $32 per month.
4. You’ll never have to look up a vendor or supplier address, check on payment terms, or even hand-write checks.

For this example, let’s pretend you own a restaurant and you want to order fresh tomatoes from a local food supplier. Keeping your accounts payable organized and in check helps you maintain accurate records in case of a tax or business audit. Review your accounts payable weekly to ensure there are no outstanding payments and to confirm you completed the payment. At Business.org, our research is meant to offer general product and service recommendations. We don’t guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services. Common payment terms include Net-30 and Net-60, which gives you 30 or 60 days to pay after receiving the invoice.

In this post, we’ll dive deeper into the accounts payable process steps, including how it works, why it is important, and how you can save time by streamlining your workflow. There are plenty of ways to do this, from writing a check to making an electronic payment or bank transfer. This can be done manually by signing the invoice or electronically by clicking a button in your accounting software. After you’ve received the goods or services, the vendor will send you an invoice.

This blog explores the intricacies of the AP check run and actionable tips to fortify your financial processes. From refining invoice approval workflows to embracing the digital shift, each step is a stride toward efficiency and precision. If you only process two or three vendor invoices a month, processing them manually shouldn’t be difficult. But even the smallest business has recurring invoices that will need to be processed on a regular basis. While most accounting software applications include a default chart of accounts, be sure to add any additional accounts in order to track your accounts payable expenses properly. You can also set up your chart of accounts on spreadsheet software such as Microsoft Excel.

tips for improving AP check runs

There are many elements of the accounting process to keep track of, beyond crunching numbers and building budgets. By implementing and following a weekly accounts payable cycle, you can reduce your workload at the end of the month while also avoiding late payments and late fees. Even if you only have a few turbotax launches free tool to help americans get stimulus payments vendor payments to make, processing the invoices on a regular basis can help with cash flow. Implementing procedures and policies can safeguard your business and mitigate risk.

Also validate that each outgoing payment is to an authorized vendor or legitimate recipient. Fraudsters often submit illegitimate invoices in the hope of getting paid by mistake. Only when the details in the three documents are in agreement will a vendor’s invoice be entered into the Accounts Payable account and scheduled for payment. With QuickBooks, you can automate expense management and get back to doing the things that you love about running your business. Whether that’s getting your hands dirty at a job site or dazzling clients and securing contracts, more time means more control over your own trajectory. Put simply, accounts payable describes the funds that you owe and accounts receivable is the amount you expect to earn.

You’ll also be able to see how much you’ve paid each vendor in any given time frame, which can help tremendously with expense management. If you pay your vendors using a check, you should probably include a copy of the invoice in the envelope along with the check. You will also want to make sure that the invoice number is on any type of remittance in order to ensure your payment is posted properly. Payment fraud attacks are the ‘new normal,’ and advancements in technology have opened the doors for fraudsters. 81% of companies were targets of payments fraud in 2019 alone, while 74% of organizations experienced payment (ACH, wire and check) fraud in 2019–up from 70% in 2018.

Periodically companies should seek professional assistance to improve its internal controls. Cash and checks – In addition to daily deposits, all check/cash receipts should be listed by someone with no recordkeeping responsibilties for more control. If there are any discrepancies, you should contact the vendor or supplier to resolve the issue. At many small businesses, the business owner or a member of their team is responsible for managing the AP process. MineralTree is the owner of all intellectual property rights for MineralTree TotalAP and MineralTree TotalPay. Intellectual property rights to the other products are held by their respective owners.

Vendor invoices without purchase orders or receiving reports

The full cycle of accounts payable simply refers to the entire process of handling and archiving a purchase, from beginning to end. The full cycle process includes multiple steps, starting with the initial purchase request and ending with the payment of the invoice. When entering an invoice, be sure to include all relevant information, including the vendor’s name, the items or services received, the price, and payment terms. A good accounts payable system can also help shareholders equity formula you identify any discrepancies with your payments and invoices. Addressing these issues quickly can help you avoid disputes, late fees, or interest changes.

As your business grows, you may need to hire dedicated staff — such as a clerk and bookkeeper — to run an accounts payable department. If you purchase flour and sugar from a supplier on credit, the amount you owe is considered accounts payable. While accounts payable represents money you owe to others, accounts receivable represents money owed to you by customers or clients. Accounting software will flag payments that are due soon, ensuring you see them with plenty of time to pay them. Using manual systems, you alone are responsible for viewing your manual ledger or spreadsheet to see what payments are due.