Accounts payable is a file or account that contains money that a person or company owes to suppliers, but hasn't paid yet. When you receive an invoice you add it to the file, and then you remove it when you pay. Thus, the A/P is a form of credit that suppliers offer to their purchasers by allowing them to pay for a product or service after it has already been received. Various denominations of currency, one form of money Money is any good or token that functions as a medium of exchange that is socially and legally accepted in payment for goods and services and in settlement of debts. ... A supply chain, logistics network, or supply network is a coordinated system of organizations, people, activities, information and resources involved in moving a product or service in physical or virtual manner from supplier to customer. ... It has been suggested that Bill (payment) be merged into this article or section. ... Credit as a financial term, used in such terms as credit card, refers to the granting of a loan and the creation of debt. ... Wikibooks has more about this subject: Marketing In economics and marketing, a service is the non-material equivalent of a good. ...

In household, accounts payable are ordinarily bills from the electric company, telephone company, cable television or satellite dish service, newspaper subscription, and other such regular services. Householders usually track and pay on a monthly basis by hand using cheques or credit cards. In a business, there is usually a much broader range of services in the A/P file, and accountants or bookkeepers usually use accounting software to track the flow of money into this liability account when they receive invoices and out of it when they make payments. The household is the basic unit of analysis in many microeconomic and government models. ... Transmission lines in Lund, Sweden Electric company redirects here. ... For other uses, see Telephone (disambiguation). ... Coaxial cable is often used to transmit cable television into the house. ... Sky Digital mini-dish Astros mini-dish. Special dish for up to 16 satellite positions (Ku-band) Satellite dish antenna for C-Band Satellite Dishes installed on an apartment complex A satellite dish is a type of parabolic antenna designed with the specific purpose of transmitting signals to and... The subscription business model is a business model that has long been used by magazines and record clubs, but the application of this model is spreading. ... Example of a Canadian cheque. ... Credit cards A credit card is a system of payment named after the small plastic card issued to users of the system. ... Accountancy (British English) or accounting (American English) is the process of maintaining, auditing, and processing financial information for business purposes. ... Accountancy (British English) or accounting (American English) is the process of maintaining, auditing, and processing financial information for business purposes. ... Accounting software is computer software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, payroll and trial balance. ... In the most general sense, a liability is anything that is a hindrance, or puts individuals at a disadvantage. ...

Commonly, a supplier will ship a product, issue an invoice, and collect payment later, which creates a cash conversion cycle, a period of time during which the supplier has already paid for raw materials but hasn't been paid in return by the final customer. Certain companies, most famously Dell^{[citation needed]} , have been able to profit handsomely by reversing the conversion cycle: they receive payment before they ship the product. Instead of granting credit to their customers, they receive it from them. Cash conversion cycle or CCC, also known as the asset conversion cycle, net operating cycle, working capital cycle or just cash cycle, is used in the financial analysis of a business. ... Dell Inc. ...

Reconciliations

One of the most difficult and time-consuming tasks can be reconciling company records of invoices and payments against vendors' statements of outstanding invoices. If the two companies have applied invoices to different sets of credit memos and checks, and the situation has been going on for a long time, it can become very difficult to untangle. For instance, if a company cuts a check for invoice #3, and the vendor applies the check to invoices #1 and #2, the vendor may continue asking for a payment for invoice #3. If this situation is multiplied over hundreds of invoices, it can take hours or days to resolve the discrepancies.Bank reconciliation is one of the major reconciliation done. A Credit Memo (short for credit memorandum) Is a commercial document issued by a Seller to a Buyer, indicating the products, quantities and agreed prices for products or services that the Seller provided the Buyer with, but Buyer returned or did not receive. ...

Expense administration

Expense administration is usually closely related to accounts payable, and sometimes those functions are performed by the same employee. The expense administrator verifies employees' expense reports, confirming that receipts exist to support airline, ground transportation, meals and entertainment, telephone, hotel, and other expenses. This documentation is necessary for tax purposes and to prevent reimbursement of inappropriate or erroneous expenses. Airline expenses are, perhaps, the most prone to fraud because of the high cost of air travel and the confusing nature of airline-related documentation, which can consist of an array of reservations, receipts, and actual tickets.

Petty cash is also usually paid out by AP personnel in the form of a check made out to an employee, who cashes the check at the bank and puts the cash in the petty cashbox.v Businesses often need small amounts of cash known as petty cash for expenditures where it is not practical to make the disbursement by check. ...

Internal controls

A variety of checks against abuse are usually present to prevent embezzlement by Accounts Payable personnel. Separation of duties is a common control. Nearly all companies have a junior employee process and print the cheque and a senior employee review and sign the cheque. Often, the accounting software will limit each employee to performing only the functions assigned to them, so that there is no way any one employee – even the controller – can singlehandedly make a payment. Separation of duties (SoD) is the concept of having more than one person required to complete a task. ...

Some companies also separate the functions of adding new vendors and entering vouchers. This makes it impossible for an employee to add himself as a vendor and then cut a cheque to himself without colluding with another employee.

In addition, most companies require a second signature on cheque whose amount exceeds a specified threshold.

Accounts payable personnel must watch for fraudulent invoices. In the absence of a purchase order system, the first line of defense is the approving manager. However, AP staff should become familiar with a few common problems, such as "Yellow Pages" ripoffs in which fraudulent operators offer to place an advertisement. The walking-fingers logo has never been trademarked, and there are many different Yellow Pages-style directories, most of which have a small distribution. According to an article in the Winter 2000 American Payroll Association's Employer Practices, "Vendors may send documents that look like invoices but in small print they state 'this is not a bill'. These may be charges for directory listings or advertisements. Recently, some companies have begun sending what appears to be a rebate or refund check; in reality, it is a registration for services that is activated when the document is returned with a signature." A Purchase Order (abbreviated PO) is a commercial document issued by a buyer to a seller, indicating the type, quantities and agreed prices for products or services that the seller will provide to the buyer. ... For the use in computing, see Yellow Pages (computing). ... This article or section does not adequately cite its references or sources. ...

In accounts payable, a simple mistake can cause a large overpayment. A common example involves duplicate invoices. A invoice may be temporarily misplaced or still in the approval status when the vendors calls to inquire into its payment status. After the AP staff member looks it up and finds it has not been paid, the vendor sends a duplicate invoice; meanwhile the original invoice shows up and gets paid. Then the duplicate invoice arrives and inadvertently gets paid as well, perhaps under a slightly different invoice number. As Mary S. Scheiffer points out in Accounts Payable: A Guide to Running an Efficient Department, "Depending on the controls in place, the second payment may or may not be caught! The phenomenal growth of payment recovery firms gives testimony to the fact that this is a serious issue in corporate America today." Payment recovery firms specialize in getting vendors to return money inadvertently paid to them. ...

Audits of accounts payable

Auditors often focus on the existence of approved invoices, expense reports, and other supporting documentation to support checks that were cut. It is not uncommon for some of this documentation to be lost or misfiled by the time the audit rolls around. An auditor may decide to expand the sample size in such situations.

Auditors typically prepare an aging structure of accounts payable for a better understanding of outstanding debts over certain periods (30, 60, 90 days, etc.) Such structures are helpful in the correct presentation of the balance sheet as of year end.

See also

• accounts receivable
• payroll
• International Accounts Payable Professionals
• List of finance topics

Accounts receivable is one of a series of accounting transactions dealing with the billing of customers who owe money to a person, company or organization for goods and services that have been provided to the customer. ... Please wikify (format) this article or section as suggested in the Guide to layout and the Manual of Style. ... International Accounts Payable Professionals is a non-profit educational organization dedicated to the professional advancement of individuals in the accounts payable field. ... Topics in finance include: // Finance an overview Arbitrage Capital (economics) Capital asset pricing model Cash flow Cash flow matching Debt Default Consumer debt Debt consolidation Debt settlement Credit counseling Bankruptcy Debt diet Debt-snowball method Discounted cash flow Financial capital Funding Financial modeling Entrepreneur Entrepreneurship Fixed income analysis Gap financing...

References

• Casher, Jonathan D.: How to Find and Eliminate Erroneous Payments, APA's Employer Practices, Winter 2000.
• Schaeffer, Mary S.: Accounts Payable: A Guide to Running an Efficient Department, Wiley, 2004.
• The Accounts Payable Network: http://www.theaccountspayablenetwork.com. AP news, research, topics, forums and tools.