Improving AP System Accuracy in Dealer Operations

Trade AP Reconciliation: Ensure Accuracy & Control 𝗜𝗻𝘁𝗿𝗼𝗱𝘂𝗰𝘁𝗶𝗼𝗻: In Accounts Payable, Trade AP reconciliation is the process of verifying that all vendor invoices, purchase orders, and payments align with the company’s ledger. Proper reconciliation ensures accuracy in financial reporting, prevents overpayments, and strengthens vendor relationships. 𝗦𝘁𝗲𝗽-𝗯𝘆-𝗦𝘁𝗲𝗽 𝗧𝗿𝗮𝗱𝗲 𝗔𝗣 𝗥𝗲𝗰𝗼𝗻𝗰𝗶𝗹𝗶𝗮𝘁𝗶𝗼𝗻: 𝗖𝗼𝗹𝗹𝗲𝗰𝘁 𝗩𝗲𝗻𝗱𝗼𝗿 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁𝘀: Gather monthly statements from all vendors. Include invoices, credit notes, and payments. 𝗖𝗼𝗺𝗽𝗮𝗿𝗲 𝗩𝗲𝗻𝗱𝗼𝗿 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁𝘀 𝘃𝘀 𝗖𝗼𝗺𝗽𝗮𝗻𝘆 𝗟𝗲𝗱𝗴𝗲𝗿: Match each invoice with the corresponding entry in the AP ledger. Identify missing or duplicated entries. 𝗜𝗻𝘃𝗲𝘀𝘁𝗶𝗴𝗮𝘁𝗲 𝗗𝗶𝘀𝗰𝗿𝗲𝗽𝗮𝗻𝗰𝗶𝗲𝘀: 𝗠𝗶𝘀𝘀𝗶𝗻𝗴 𝗜𝗻𝘃𝗼𝗶𝗰𝗲𝘀: Check with vendors for unrecorded invoices. 𝗗𝘂𝗽𝗹𝗶𝗰𝗮𝘁𝗲 𝗘𝗻𝘁𝗿𝗶𝗲𝘀: Remove or adjust duplicate postings. 𝗣𝗮𝘆𝗺𝗲𝗻𝘁 𝗗𝗶𝗳𝗳𝗲𝗿𝗲𝗻𝗰𝗲𝘀: Verify payments against invoices and POs. 𝗣𝗼𝘀𝘁 𝗔𝗱𝗷𝘂𝘀𝘁𝗺𝗲𝗻𝘁𝘀 & 𝗖𝗼𝗿𝗿𝗲𝗰𝘁𝗶𝗼𝗻𝘀: Correct ledger entries after approvals. Record credit notes or accruals as necessary. 𝗨𝗽𝗱𝗮𝘁𝗲 𝗥𝗲𝗰𝗼𝗻𝗰𝗶𝗹𝗶𝗮𝘁𝗶𝗼𝗻 𝗥𝗲𝗽𝗼𝗿𝘁𝘀: Maintain a trade AP reconciliation report highlighting discrepancies, corrections, and outstanding balances. Track aging for overdue invoices. 𝗣𝗲𝗿𝗶𝗼𝗱𝗶𝗰 𝗥𝗲𝘃𝗶𝗲𝘄: Conduct monthly or quarterly reconciliations to maintain accuracy. Use reconciliation reports for internal and external audits. 𝗕𝗲𝘀𝘁 𝗣𝗿𝗮𝗰𝘁𝗶𝗰𝗲𝘀 & 𝗧𝗶𝗽𝘀: Automate reconciliation using ERP/AP tools for faster and error-free processing. Keep proper documentation for all invoices, payments, and adjustments. Collaborate with procurement and finance teams to resolve disputes quickly. 𝗖𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲𝘀 & 𝗦𝗼𝗹𝘂𝘁𝗶𝗼𝗻𝘀: 𝗖𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲: High volume of vendor transactions. 𝗦𝗼𝗹𝘂𝘁𝗶𝗼𝗻: Batch reconciliation and automation. 𝗖𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲: Missing or delayed vendor statements. 𝗦𝗼𝗹𝘂𝘁𝗶𝗼𝗻: Maintain a regular vendor communication schedule. 𝗖𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲: Misclassified ledger entries. 𝗦𝗼𝗹𝘂𝘁𝗶𝗼𝗻: Standardize ledger coding and review entries regularly. 𝗘𝘅𝗮𝗺𝗽𝗹𝗲 𝗦𝗰𝗲𝗻𝗮𝗿𝗶𝗼: A mid-sized retail company faced frequent payment disputes due to unreconciled AP ledgers. After implementing a monthly trade AP reconciliation process with automated ERP tools, they reduced disputes by 75% and improved vendor satisfaction. Trade AP reconciliation is a critical control for accurate financial reporting and vendor management. How does your organization handle trade AP reconciliation? Share your strategies below! #AccountsPayable #TradeAP #ProcureToPay #FinanceOperations #APReconciliation

⭐ Key Checkpoints for Accounts Payable (AP) Efficient invoice processing is vital for maintaining smooth business operations and strong vendor relationships. Here are 10 essential checkpoints to ensure accuracy, compliance, and efficiency in your AP workflow: 1️⃣ Invoice Receipt and Logging Log and track all invoices upon receipt. Ensure they are complete and from authorized vendors. 2️⃣ Invoice Validation Match invoices to POs and confirm receipt of goods/services. Validate amounts and payment terms. 3️⃣ Compliance and Policy Checks Ensure alignment with company policies, including approval limits and tax accuracy. 4️⃣ Data Entry and Coding Accurately enter details into your ERP system and assign proper GL codes. 5️⃣ Approval Workflow Route invoices for approval based on your matrix and follow up to avoid delays. 6️⃣ Duplicate Invoice Check Use system tools to detect duplicates and prevent double payments. 7️⃣ Payment Scheduling Schedule payments per terms, leveraging discounts where applicable. 8️⃣ Exception Handling Proactively resolve discrepancies, like mismatches or incorrect amounts. 9️⃣ Audit and Documentation Maintain proper documentation and audit trails for compliance and transparency. 🔟 Reconciliation Regularly reconcile vendor statements and monitor AP aging reports for overdue items. By implementing these steps, your AP team can enhance accuracy, reduce processing time, and foster better vendor relationships. What practices have helped you streamline your AP processes? Share your insights in the comments below! #AccountsPayable #InvoiceProcessing #Finance #Efficiency #Compliance #r2r #billing #glcoding #IP #P2P #AP

Accounts Payable Internal Controls AP is the primary source of payments, i.e., cash outflow. Once you make the payment, cash is out the door. That warrants robust internal controls to prevent wrong payments, errors, and fraud. Yesterday, I shared the Procure to Pay Process Flowchart. Today, we are going to strengthen the process with these internal controls. AP Internal Controls help ensure: - Accuracy and Reliability - Fraud Prevention - Compliance - Operational Efficiency - Risk Management - Trust and Credibility - Cost Savings Internal Controls are an integral part of finance and accounting, and everyone in finance should clearly understand internal controls, at least in their area of responsibility. I have compiled the list of AP controls, which provides an overview of the control and the risk mitigated. 1. Segregations of Duties SOD is a fundamental internal control principle that involves dividing key tasks and responsibilities among multiple individuals or departments. 2. Preparer – Checker Control The Preparer-Checker Control is an internal control designed to enhance accuracy and reliability in financial processes. The two individuals involved in a transaction are the "preparer" and the "checker." 3. Payment Authorization Establish a clear hierarchy for authorizing payments. Different individuals should be responsible for approving invoices and authorizing payments. 4. Vendor Verification and Approval Vendor verification and approval are integral to the accounts payable, ensuring organizations engage with legitimate and reputable suppliers. 5. Three-way Matching Matching invoices with corresponding purchase orders and receiving reports (three-way match) is critical to ensure that the organization is billed accurately for goods or services received. 6. Accurate Coding and Classification of Expenses This control ensures that each transaction is correctly identified, categorized, and recorded in the organization's accounting system. 7. Invoice and Payment Reconciliation It involves comparing and verifying invoices with corresponding payments to ensure accuracy, completeness, and adherence to financial policies. 8. Duplicate Payment Prevention Control Duplicate payments occur when the same invoice is paid more than once, leading to financial discrepancies. A Duplicate Payment Prevention control is essential for maintaining financial accuracy and preventing fraud. 9. AP Sub-Ledger and General Ledger Reconciliation The reconciliation between the AP sub-ledger and the General Ledger is a critical internal control mechanism that ensures accuracy and consistency in financial reporting. Abdul Khaliq