ERP Internals/Modules/Accounts Payable
Every enterprise purchases goods, services, assets, or office supplies from its suppliers (also known as vendors). Accounts Payable pays these suppliers on time (taking advantage of payment discounts if possible) while avoiding duplicate payments and bank over-drafts. Accounts Payable is the last step in the supply chain where Purchasing is the first. Accounts Payable accepts invoices, selects invoices to be paid, generates checks and forecasts future cash requirements based on due dates. Some AP checks are issued to people or organizations that are not worth putting on file since they are likely to receive only one check. Some enterprises prepay part of the invoice amount because the supplier requires a deposit. Every ERP has an Accounts Payable module.
Suppliers can see their invoices and checks and basic information via the web and update some portions of it (name, address, and contact information for example).
There are several major groups of tables in Accounts Payable.
- Supplier information is the master data used by Accounts Payable. It contains information about the enterprise's suppliers and other creditors. Information about the supplier, its locations, contacts etc. These tables are also used by Purchasing.
- Bank information is also master data. It contains information about the enterprise's banks and bank accounts.
- Invoices are documents issued by suppliers giving notice of what is owed them. Examples are standard invoices, credit memos, debit memos, interest memos. These transaction tables typically contains the invoice header, lines and payment schedules.
- Payments or checks are transaction data reflect payments done to suppliers.
- Accounting Entries are transaction data with the accounting generated by invoice and payment transactions.
Accounts Payable sends pricing data to Inventory, assets to Fixed Assets and accounting journal entries to General Ledger. Accounts Payable receives purchase orders and receipts from Purchasing in order to match invoices.
The first transaction records a supplier invoice. This can be verified against the related purchase order if there is one and the receiving report that lists what goods were actually received. Not every enterprise uses the last two options.
The second transaction pays supplier invoice(s). Each check can pay one or more supplier invoices. Invoices must be approved for payment before they can be paid.
The vast majority of the module's transactions consist of the above two. The third fundamental transaction is that of adjustment when things go wrong. We will document this later.