Account payable is basically the money that a business or a company owes to its suppliers that features as a liability in the balance sheet of the company. It is a type of credit that the supplier offers the company against goods or services that have already been sent to the company and received by it.
There are two types of payables – one is the Trade Payable which is payable against purchase of physical goods that enter the inventory and the other is the Expense payable which is payable for purchase of goods and services that are expensed like advertising, travel, office supplies, utility bills etc. Businesses need to maintain a log of this liability account and generally use accounting softwareto keep a track of invoices that are pending payments and invoices that are paid. Why is it important to manage Accounts Payable optimally?
In view of the above benefits, there is trend with more and more organizations going in for outsourcing their Accounts Payable system where the outside agency helps the organisation streamline their finances and accounting processes to achieve set business goals in the most efficient manner. Why outsource Accounts Payable? All business entities that consider Account Payable Outsourcing to a third party vendor should first weigh the advantages and disadvantages of doing so. Advantages of outsourcing Accounts Payable:
In the same breath, there are people who might argue about the cons of hiring an outsourced agency. One of the biggest arguments would be that there are chances of data mix-up between different clients. It is important to mention here that there are modern methods and technology to ensure complete data security and confidentiality so that there is zero risk of data of one company being shared with another.
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