Accounts Payable and Your Business: Consider these Critical Insights
Staying on top of accounts payable is one of the top requirements to ensure the success of any business, especially startups and SMEs. Keeping a firm grip over your accounts payable help you prevent unexpected expenses that could throw even the best budget off the rail. Accounting payables refers to the money a company owes its suppliers and vendors. Accounting firms in Dubai can help you with your accounts payables.
In this article, we will help you stay on top of your accounting payables by equipping you with certain critical insights. Read ahead to gain further insights on accounting payables:
What constitutes accounts payable in a business?
The bills a company is obliged to pay generally constitute its accounts payable. It can be the money it owes to suppliers for the goods and services it provided. All bills fall into the accounts payable except payroll. Getting your accounts payable process right is critical to your company’s overall financial health, including its business credit score. The best accounting companies in Dubai can help business owners resolve any issue concerning accounts payable.
Steps in the Accounts Payable Process
Understanding the key steps involves is critical to creating a robust accounts payable process for your business. Refer to the following to develop an effective accounts payable process in your company:
a). Purchase order
The purchasing department of the company initiates the purchasing process by sending a purchase order to a vendor
b). Receiving report
Once the company receives the goods or services, a receiving report is made to document the shipment, including any issues and damage
c.) Vendor invoice
The vendor creates and sends an invoice to request payment for the goods or services purchased and received. When the company receives the invoice, it will note the payment terms and process payment within those terms
Best Practices for Tracking Accounts Payable
Accounts payable needs to be tracked diligently and paid promptly as they can directly affect your company’s cash flow. When bills and invoices pile up it can lead to unhealthy financial practices that may put your company in peril. Effectively tracking invoices, payments, and due dates can be overwhelming for your accounts payable department, especially when the business grows and the volume of transactions increases. The below list may help you adopt some good practices for tracking accounts payable for your organisation:
Keep accurate accounts payable records
Keeping accurate accounts payable records will come in handy for you in case of payment disputes. The records will help you to remind the business of current or outstanding invoices, or as proof of spending at tax time
Use excellent accounting software
You need to buy robust accounting software which will automate and simplify the accounts payable process. Software for accounts payable process can track the payments, reduce errors and speed up the process. Accounting firms in Dubai can help you find appropriate accounting software for your company.
Excellent attention to detail is required while handling the accounts payable process. You need to verify every invoice for accuracy, billing date and payment date.
Reference original invoices
It is advisable to work from the original invoices whenever possible. If you have sent any electronic invoices, it is better to print the invoice and file the initial email to avoid errors and reduce confusion.
Keep supplier information up to date
In an international market like Dubai, suppliers may be acquired, contacts may change and companies may relocate. In situations like these, an invoice may end up not being recognised leading to delayed payments or payments being sent to the wrong address. Find a solution to keep your supplier information up-to-date.
Match invoices and purchase orders
Always match your invoices and purchase orders to make sure that you’re paying for something valid. It can also help to identify discrepancies such as overcharges or different quantities, and potential accounts payable fraud.
Consult with the Best Accounting Firms in Dubai
Many SME owners regard the accounts payable process as simply fulfilling a necessary but somewhat repetitive back-office function. Instead, you should regard start appreciating the added value that accounts payable can provide (ex. improving cash flow). If you are struggling to improve your accounts payable process, do not hesitate to seek help from the best accounting companies in Dubai such as Jitendra Chartered Accountants (JCA).
We are one of the leading providers of accounting services in Dubai that can resolve any bottleneck in your accounting function. JCA stands out from other accounting companies in Dubai with its highly qualified team of accountants, over 21 years of industry experience, and thousands of satisfied clients. We also provide tried and tested solutions for compliance requirements related to UAE corporate tax, Value Added Tax (VAT), Anti-Money Laundering (AML), Economic Substance Regulations (ESR) and Ultimate Beneficial Ownership (UBO). Contact us to ensure your company’s financial health is in safe hands.