Reason for payment:
As soon as verified accounts payable become due and all other payment requirements have been met, accounts payable is entitled to meet them. After approval, this is usually done by an automatic booking software via online banking. In some cases, a check by a second employee is also provided for control purposes before the transfer is made. For regular payments, you can set up standing orders or similar automated cashless transfer orders. The setup, administration and ongoing maintenance of these orders is also the responsibility of the accounts payable department.
Archiving of incoming invoices:
Incoming invoices received by companies cannot simply be destroyed after the payment has been booked. There is a legal obligation to store the data for a period of ten years from the end of the year in which the invoice was issued.
Not only incoming invoices are subject to certain retention periods . This includes, among other things, invoices, receipts and emails.
It is up to the accounts payable department to collect these invoices and to archive them systematically. Normally, this task can again be carried out by a corresponding function of an ERP system. Accounts payable employees are therefore mainly responsible for the correct entry of the respective invoice data . The same applies here: Access to the archived invoice data must be secured for ten years . In the event of a system change, a complete and identical migration of the existing data must be ensured, and it must be available in legible form for inspection by the tax authorities at any time. It can therefore be worthwhile to use archiving software.
An example from accounts payable: travel expense accounting
One of the activities that are common in accounts payable is processing travel expense reports that employees of a company present for their expenses on business trips. On the one hand, these settlements are tied to certain legal – especially tax law – requirements; on the other hand, internal company regulations can also contain additional agreements that are more favorable for the employee (s), which the accounts payable department must of course observe. Here it is the job of the accounts payable department to check the individual items, to request additional documents if necessary, to request the issue of a replacement document or to reject non-reimbursable expenses. The travel expense report, which has been correctly recorded and provided with all receipts, is finally checked, followed by the payment instruction.
Is it worth having your own accounts payable department?
Whether you as an entrepreneur should maintain your own accounts payable department or whether general financial accounting, which is responsible for all accounting tasks, is sufficient for your company, depends to a large extent on your entrepreneurial and tax status. In general, it can be said: the larger the company and the higher the growth rate, the more sensible it is to split the financial accounting. The calculation of the growth rate is easy.
This is especially true if your company does not fall under the small business regulation , i.e. you are obliged to double-entry bookkeeping and to draw up a balance sheet . There is no obligation to do this in this case either, but the expense of double bookkeeping, which forms the basis of the balance sheet, is in itself considerably higher than with the simple income-surplus-calculation (EÜR) of the small business regulation. A better overview of financial obligations and income is therefore a great advantage and makes it easier to draw up the balance sheet.
For small business owners, the question of separating accounts payable and accounts receivable, especially at the beginning of their work, does not arise. As soon as it becomes foreseeable that your company will have to be accounted for in the following year, you should in any case consider switching to separate financial accounting for accounts receivable and accounts payable. Even if you intend to prepare the balance sheet yourself, you have to prepare a reconciliation calculation from the EÜR to the balance sheet in good time – this is definitely easier for professional tax advisors with a good overview of the individual factors in financial accounting .
Accounts Receivable and Accounts Payable: That’s the difference
The distinction between accounts receivable and accounts payable is very simple: all those tasks that arise in accounts payable for processing and managing incoming invoices from accounts payable exist more or less in reverse order for the accounts receivable side. As a result, it is not the accounts payable master data that is managed here, but those of the accounts receivable – i.e. the company’s customers; Incoming invoices are not recorded, but company receivables resulting from purchases on account and invoices paid are archived.
A very important difference to accounts payable is the dunning system : Since high open receivables from external service providers or suppliers can impair the liquidity of a company, accounts receivable not only play an important role in assessing the creditworthiness of the accounts receivable, it is also for collecting responsible for outstanding claims. In the event of a delay in payment, it initiates reminder letters, if necessary, arranges installment payments and, if these measures are unsuccessful – provided that the relevant specialist knowledge is available – can also independently apply for court orders instead of a lawyer .