1. What is The Accounts Payable Process Flowchart

Flow charts are used to construct business plans, algorithms, or to show the trouble steps. Multiple software helps to develop flow charts. The main reason behind making the flow chart is to show the ordinary people or give them the reference point when dealing with any project or process. The accounts payable process flowchart is the diagram that shows the process while using multiple symbols that contain all the information about each step.

In business projects, accounts payable process flowcharts are built to show the accounting and financial department. However, these type of flow charts is the collection of normalizing accounting elements in which shapes will help you to design accounting processes. These charts include purchasing process, account payable flowchart, profit receiving flowchart, account receiving diagram, etc. In this article, we’ll discuss how to draw the accounts payable process flowchart in detail.

1.1 The Account Payable Procedures

Creating the guide before AP processes and procedures will aid in reducing the errors. Following are the guide to describe procedures:

• Get the vendor payment bill and generate a three-way match to check consistency against invoices, products receipt, and purchase orders.
• Account payable procedures are must verify the goods receipts for the approval of invoice payment.
• Payments are issues according to the invoices confirmed by the AP department, and the variances are corrected before it.
• Once you send the payment, mark the invoice as done or paid.

2. The Steps of Accounts Payable Process

There are four main processes of the account payable process. It includes:

• Accounts Payable Setup
• Invoice Processing
• Special processing
• Reporting

2.1 Account Payable Setup

In this step, you must consider the reporting needs and payment processing. Find out the company along with the vendor’s structure, which meets the requirements. Then set the account payable application according to the gathered data. Moreover, it will include the bank accounts information in which you’ll make payments, terms, and conditions of the amount you’ve along with the supplier’s payment.

2.2 Accounts Payable Invoice Processing

It consists of paying, releasing, and entering of invoices. Moreover, maintain the bill between the moments you pay them. However, one has to close the accounting periods during this process.

2.3 Accounts Payable Special Processing

To enter the amount you’ve paid for the bills, you can use the Accounts payable applications for the processing include paying employee amounts, creating a bill of exchange, and the annual payments. However, one can make reports on important information as well.

2.4 Accounts Payable Reporting

This program allows you to collect the reports on open payables, bills history, and remaining vendor amounts, employee balance, and more. Use the application to complete federal reporting.

Source:Netsuite

3. Tricks to Make A Perfect Accounts Payable Process Flowchart

The finance department requires a flow chart when they think their team is struggling to find the organization’s requirements and invoice system. However, the following are the hacks that could help you generate a simple flow chart that is easy to understand and flow.

3.1 Use Digital Tools

Applying the account payable solution is not only about replacing the paper-based work from the digital workflow. It has many benefits, including getting all the information in digital format used to on employee desks or even unopened envelopes.

With the AP automation, invoices will be automatically tracked, and everything stored in the digital archive. In this way, the team will get the correct guidelines about which information they need to complete before the end of the month. They’ll end the monthly payment books according to the digital flow chart.

Furthermore, the easy access to data to the AP team will also help them get promotions, improve the cash flow, and check the incoming payments with the help of the flow chart. Furthermore, by regaining all the invoice attempts on the digital tool, you’ll know about every fraud attempt regarding payment. Those companies who can’t control it or have digital devices are more likely at risk of fraud issues by mistaken or deceived by the employees.

3.2 Operating Repetitive Tasks

AP teams perform so many tasks repeatedly, which includes invoice processing, checking, and sending it to the approver and creating the list of purchase orders line by line. One can operate all the monthly tasks through the accounts payable automation solution. First of all, start with creating a chart for the current system and find the steps that could operate by implementing business rules in the order.

3.3 Performance Metrics Usage

Once you implemented AP, make sure to monitor its performance by tracking a few critical metrics. However, variations are possible according to the business. Here are the four parameters that every company should consider:

• Adaptive rates for the order based payments;
• Complete developmental lead time;
• Distribution rate (automatic);
• Approval time (manual).

Source:Slideteam

4. How to Create The Accounts Payable Process Flowchart

When creating accounts payable process flowchart or other flowcharts, there are two methods to make totally.

4.1 How to Create The Accounts Payable Process Flowchart in General

One can easily make the accounts payable process flow chart by using multiple software. All you need to do is to download the software, and further steps are as follows:

• Click on the accounting flowchart;
• Create the design you need;
• Put the symbols you required to create the process;
• Make sure to build the connector lines in between to show the whole procedure clearly;
• After completing the diagrams, save it.

4.2 How to Create The Accounts Payable Process Flowchart in EdrawMax

Step 1: Open EdrawMax online/software, then click Flowchart to choose a template to get started;;

Source: EdrawMax

Step 2: Select a template from templates gallery or click “+” to create one, and use symbols and shapes in the toolbar to keep editing;

Source: EdrawMax

Step 3: After finished your creation, export it in multiple formats and share or print it directly.

Source: EdrawMax

5. Conclusion

In this article, we’ve discussed the detail related to how to draw the accounts payable process flowcharts. However, it has so many ways and hacks used to simplify the process and make it understandable. Furthermore, with the account payable process flow chart, the chances of errors are minimized, and the team gets the monthly work guidelines.

One has to make a flow chart that perfectly defines the plans, products, purchase, payments, and other financial details. Accordingly, EdrawMax is the easiest tool to make accounts payable process flowchart and more diagrams.

How does the account receivable present in the cash flow statement?

Meaning of Accounts Receivables

Account receivables are the amount of money due to enterprise for goods or services delivered to customers but not yet paid by them. It refers to the outstanding invoices the enterprise has or the customers owe the enterprise.

It represents a line of credit extended by enterprise and normally has terms that require payments due within a relatively short time, and within a year. Most businesses operate a portion of the sales to be on credit.

Businesses offer such a line of credit to regular and special customers. This avoids a sort of convenience to the customers and hassle of making the payment each time is avoided.

Accounts Receivables and
Cash Flows

Every business must record all its payables and receivables to measure the company’s cash flows. Accounts receivables are part of “Cash In” vs accounts payable which equates to “Cash Out”. Account receivables arise owing to the customer.

If the business is a supplier, it already has its own cash-flow considerations and sets how long it is willing to receive the payment from the customer. For supplier i.e. the business, letting a customer wait for a little while before paying is called an account receivable.

These short-term credits are called current assets on the balance sheet and have an inverse impact on cash flows as accounts payable.

For example, the business has made a sale of $100,000 in 50% credit and 50% cash, receivable within months from sale.

The amount of $50,000 received in cash sales would be directly recorded as sales over here and it is a cash inflow to the business.

Rest $50,000 when received will be cash inflow to the business. If that amount is received next year, the cash inflow will incur next year only that is in the year of receipt.

Accounts Receivables and
its recording

The double entry system of bookkeeping states that for every debit there is credit. So, if credit sales is made, accounts receivable will be debited while sales as income will be credited. In this transaction, there is no movement of cash.

Using the accrual concept of accounting, accounts receivables have increased and sales i.e. net profit has also increased respectively.

The starting point of the cash flow statement is Net Profit and it has been increased due to transactions that did not involve cash.

However, transactions not involving cash flows do not work for the cash flow statement. Thus, the business deducts any net profit i.e. sales indirectly that do not involve cash movements.

On the other hand, an increase in accounts receivables has to be deducted from Net Profit in order to move from the accrual concept of accounting to Cash Used from operations.

Presentation in Financial
Statement:

Income Statement: The corresponding amount equivalent to accounts receivables are recorded as sales.

Balance Sheet: The amount due from the customer is called accounts
receivables. It is popularly called Trade Receivables and it is a current
asset.

Cash Flow Statement: The increase in accounts receivables is
deducted from Net Profit and the decrease in accounts receivables is added to
Net Profit

Presentation in Cash Flow
Statement:

When a cash account or bank account is debited against accounts receivables, then only the accounts receivable impact the cash movement.

Then this movement has to be recorded in a cash flow statement to show the impact on the cash. In the following format, accounts receivables have been presented in the cash flow statement prepared using the indirect method.

Year
ended March 31

2019

Cash
Flows from Operating Activities

 

        Net Profit (Loss)

XXX

        Add: Loss from discontinued
operations

XX

        Add: Non-cash items

XX

         Add/Less: Change in Assets and
Liabilities

 
                            Increase in Accounts Receivables
(XX)

                            Increase in
Accounts Payable

XX

NET CASH
FLOWS FROM OPERATING ACTIVITIES

XXX