ACCOUNTS PAYABLE BUSINESS PROCESS
Contents
Purpose of document:
The purpose of the
accounts payable documents to define the process of as-is system of A.B.C
Company. Project will
inform about the as-is system of A.B.C company.ltd. This document will ensure
about the process of accounts payable and flow of process of as-is process.
This document will ensure that changes will be beneficial. This document will
also show the difference between as-is process and to be process. The purpose
of the document is that to through this document easy to understand the process
of accounts payable.
Notation used in this document:
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for the start and end.
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the manual operation.
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Process notation.
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This notation used
for decision making.
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This notation used
for off page / this notation show about the process continue on next page.
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used for the multiple documents.
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the process stop.
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Introduction:
I am the student of
PAF-KIET and I am the student of BBA-ERP department. I am working on the domain
of accounts payable. From this project you will be learn about the flow work
process of accounts payable. Through this project report you will be able to
understand the main/ core process of accounts payable. This project report will
show you the work flow of vendor relation, purchasing order, invoicing
generating. Core activities of accounts payable will show you the report of
accounts payable. This project gives complete information about accounts
payable process and activities which are to be performed. In this project like
vendor relation report, order report, purchase report and invoicing generated
information and link of the accounts pay able process department to vendor,
purchase department, order generating department and procedure of payment to
the vendor. You can understand well from this report the relation of vendor,
purchasing, order and invoicing vouchers.
CONTROL STATEMENT:
This document is the
property of A.B.C Company.LTD.this document contains the pages# 23.
ACCOUNTS PAYABLE INTRODUCTION:
Accounts payable
is means by which you can disbursement of money from the company. Accounts
payable records and pays a bills and liabilities of company. The vendor to whom
the money is owed issues an “invoices”. The accounts pay able is that procedure
in which vendor, purchaser and voucher generating are the main process of
accounts payable. To whom we are purchasing the invoices we are liable to pay
some amount to him. The general flow of accounts payable is as follows.
Mail desk:
Mail desk is the
general process of accounts payable in which documents are arranged according
to the time and date stamped in various folders.
Assistant manager:
Assistant manager is
the second general process of accounts payable assistant manager maintains the
batches received from the mail desk and main also maintain the receiving goods
from the vendor. Manager manages the flow of documents for the entry based
priority and managed according to the date.
Vendor clerks:
Vendor clerks add new
vendor and update the information about the new vendor for documents and
forwarded by the data entry department.
Payments cycle:
The first step of
payment cycle is that files are generated valid verified documents. After that
the file will be sent to the concerned department for checks preparing.
Payments:
After
verified the invoices by the authorized department/ person then file will be
sent to the accounts payable department. Before issuing check to vendor
accounts payable department must verify the invoices which are receiving from
vendor after completing the whole procedure of verifying invoices if invoices
are right according to the purchasing order then accounts payable department
will pay amount to vendor.
Accounts payable definition:
In accounting accounts
payable are debts resulting from purchasing or receiving services on credit or
an open account. You have accounts payable when you have not yet paid for the
assets or services you have received.
I am explaining as-is
process of accounts payable. The core business process of accounts payable is
as follows.
§ Vendor selection.
§ Purchasing order.
§ Invoices receive.
§ Order generating
Vendor relation
When
a company wants to purchase invoices then company must select a vendor from
which he can buy some kind of
invoices. When a company starts purchasing invoices from selected vendor the
company must operates some activities. Company received some invoices from
vendor then company will check the dates of items on the statement if there is some mistake like order of
invoices is incomplete then report to vendor and request to vendor for the required activities
which are to be performed in a vendor relation.
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stop
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Whenever a company
makes a purchasing order the company will follow the procedure like this first
of all company will select vendor then give statement of order purchasing for
receiving invoices whenever a company make a order after some days the company
will receive invoices from vendor if company received invoices then particular
department will check the order id and other requirements if the requirements
are fulfill accordingly the purchasing order then the report will be send to
the AP (accounts payable department). AP department will prepare checks for
vendor to pay him after completion the checks then vendor can collect amount of
providing invoices to the company.
As –is process flow of accounts payable:
This is the already
existing system (AP) in ABC Company and lot of employees having all over the
world. It is difficult to record manually record of every one employee because
it is time consuming and the chances for number of errors are lot. After
completing this project our system generate automatically invoices in each
department of AP such as purchasing, vendor, order generating etc.
Overview of as –is accounts payable system:
Overview of as- is
process means over all architecture of a system. This architecture view of a
system will show the legacy process flow of accounts payable process system in
a company. The overview of the legacy system of accounts payable process will
help us to understand the work flow of as-is process of accounts payable
process. As –is process systems shows that what is the flow of work of any
business process flows. Through overview of a system we can understand easily
the flow of work and process of the system.
As- is process facing problems:
§ Time
consuming.
§ Validation
invoices.
§ Entering
manually invoices.
§ Duplicate
invoicing process.
In
as-is process time consuming is the major one problem and other main problem is
entering invoices manually through which lots of problems were occurs like
invoices id receiving invoices from vendor.
Solutions:
Invoices can be
processed and ready for payment as quickly as four hours receipts.
§ Automation
of data.
§ Work
efficiently.
§ Response
to supplier and vendor quickly.
§ Generate
invoices automatically in each department.
§ Errors
detection automatically.
Business process definition:
A business process is a
collection of activities which produce something to value to customer. Business
process means an approach to performance improvement. Skill development
activities .it is the fundamental re-thinking and radical re designing of
business process to achieve dramatic improvements.
Purposes of business process re- engineering:
The purposes of
business process re-engineering are that to develop a new system or create some
new changes in existing system. Main purposes of re engineering in a system are
that remove all problem creator process. Focus on improvements in a way that
business process work efficiently. The focus of improvements is on value added
actions that makes the customer services and experience better. Improve the
quality of a product. Implement new process for the existing process.
Re-engineering success factors:
Although the theoretical principles sounds very
attractive, a commonly quoted statistic is that more than 50 percent of
reengineering efforts have failed to deliver the intended improvement. Five
factors are critical to the success of a reengineering initiative:
Business Objectives:
Organizations must inform their people of the
need of reengineering, the current position of the organization in the market
and what objectives can achieved. People need incentive to change and have to
be continuously reminded of the objectives during the reengineering process.
Sharing the same strategic vision and a having a clear communication channel
between top management and workers are both essential to success.
Human Factors:
Resistance to change is natural and inevitable.
Reengineering changes not only jobs and skills, but also people’s styles and
attitudes. Intensive and timely training are indispensable to accomplish the
change. Even the CEO needs new skills to manage processes and to communicate
with workers and customers.
Moreover, resistance wears many masks and takes
many forms. The first kind of resistance is obvious. People just resist change.
One way to ease this resistance is by getting people involved in the
reengineering process. They should then put their efforts into criticizing the
redesign (i.e. improving) rather than resisting from the outside. They will
then take ownership of the changes. The other kind of resistance is hidden and
very difficult to notice. These people say they want to change, but they use
the process to build their own empires. They are out to serve their own need
not the company’s.
The Reengineering Team:
The reengineering team should include both top
executives and workers. The workers may clearly see the problems that they
suffer from, in their own individual tasks and department. It is, however,
difficult for them to see a process as a whole, and to recognize the source of
problems. This is caused by the poor overall design of the organization.
Moreover, they don’t have sufficient authority to insist that a process,
especially one that crosses organizational boundaries, should be transformed.
The top executives have a broader perspective of the organization, but their
design usually ignores the impact on their people and a huge resistance will
therefore be encountered.
Full support and involvement from top management:
Top management must be supportive and help full. Top
management must be fully involved in the project. All the resources must
allocate to the project team from top management. If top management is not
fully interested in project and not supportive for the project team the chance
is there for the failure of project. Top management must know every situation
about the project.
Quantitative performance measure
Quantitative measures should focus on the quality
of the processes and the degree to which objectives are met. Not only can these
measures help to indicate reengineering progress, but they can also allow
feedback from the workers. For example, workers opinions on how real- world
jobs compare to the redesigned jobs on paper.
To be process definition:
After analyzing AS-IS
of accounts payable process we see the lot of errors in as is process now the
to be design process cover the errors. To be designed process detect the error,
automate the information regarding invoices, purchases, order information,
generate invoicing automatically in each department. Response to vendor quickly
and payments time duration must be reduced.
Features of to be designed process:
Auto mate the data
base.
This system will be no
time consuming and send report about invoice to each department and alert
message if there any kind of mistake occurs. Send report to vendor after
receiving invoices and also send report to vendor about payment.
If vendor receive
payment this system will send report to accounts payable department.
This system will
provide automation of accounts payable department to vendor.
Information gathering:
For design new system
it is necessary to gather information from anywhere else so the information
gathering resources are as follows to make the system efficiently.
§ Accounts
payable process
§ Core
process of accounts payable
§ Sub
process of accounts payable
§ Problem
areas
§ Meeting
with the accounts payable department head.
§ Meeting
with consultancy.
Information gathering:
For design new system
it is necessary to gather information from anywhere else so the information gathering resources are
as follows to make the system efficiently.
§ Accounts
payable process
§ Core
process of accounts payable
§ Sub
process of accounts payable
§ Problem
areas
§ Meeting
with the accounts payable department head.
§ Meeting
with consultancy.
BPR team:
For to be process it is
necessary to create a BPR team. BPR team must be active and supportive for
every one
of team member.
The
necessary steps for BPR team are as follows.
§ Accounts
payable specialist.
§ A
leader.
§ Programmer
(ABAP language, c# language).
§ Functional
and technical consultant.
Team workers:
Each team has all the
skills necessary in order to complete a single item from beginning to end without any delay. When a process
is started as a result of customer’s requirement it is allocated to the team workers only on that
particular request until it is finished. The team can be reassigned when they completed their task.
Empowerment:
Another re-engineering
concept goes with the team based approach is empowerment. To get over the
problems of having waded through the management hierarchy to submit any new
ideas the manager delegate a great deal of power to workers themselves. Workers
are free to discuss with manager and make decisions. Approaches to design that
were once tied down by the company’s departmental structure are now able to be
implemented. The company should become much more innovative and efficient as a
result of empowerment, improving customer relations and increasing prosperity.
There is also the fact that jobs are much more satisfying and dynamic as well
so the workers gain considerably from the change.
Accounts payable specialist:
Accounts payable
specialist must know the overall process of a required system. Specialist must have a fully command on it. He must
know about the core and sub process for a required system. A specialist must have qualities
engaged the entire team worker in a project.
BPR methodologies:
§ Gathering
information from account payable department.
§ Analyze
existing process.
§ Identification
problems of existing process.
§ Design
to be process.
§ Implementation.
§ Continuously improvements.
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Gathering information
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Identification of as- is process
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Analyze as-is process
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Design to be process
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Implementat-ion.
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Continuously improvement
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Information technology:
Most problems
concerning communication and organization can be radically improved with the use of modern computer systems.
Information technology can also break remove the old process. Using new technology we can improve
quality and process as well as the efficiency of worker will be increase.
Technology used:
Software’s:
§ ABAP
programming.
§ C
sharp programming.
§ Windows
XP, 7 and vista
Hardware’s:
§ Intel
cures 2 duo.
§ 1GB
RAM.
§ LAN.
To be process definition:
To be process means some
changes in existing process. In to be process we improve the process and quality. Suppose it in existing
process so many processes to be performed. To be process will remove all the problems of
as-is process. Through to be process new functions will be developed and easy t o imitate
task.
Benefits of to be process:
Benefits of to be
process are as follows.
The new system to be
designed process system will provide to you automation of invoicing send report
to the vendor and accounts payable department at the same time. Give updated information
about invoices. If vendor received payment from accounts payable department
then system will generate report at the time to both.
This system will
generate invoice id automatically as well as vendor id. This system will integrate
each department.
Architecture view of to be designed:
To be over all activities process flow:
To be over all process flow description:
AS above shown in the to be over all process all
activities are performed. This show the automated system of accounts payable
business process. If invoices are received from the supplier /vendor then after
receiving the invoices report will also sent to the accounts payable department
for the prepare checques / for the payment of vendor. The invoices checking
from the purchasing department and approved then report automatically generated
to the accounts payable process and also to the vendor that your invoices
approved. When checque will prepared for the payment of vendor then
automatically report generated to the vendor that your payment is ready. After
receiving payment by vendor then automatically report generated to accounts
payable department.
Getting from current to future state – the GAP:
Current:
In current process of
accounts payable there is a time consuming lot of errors are occurred due to manual work. In as –is process.
Problems facing due to manual process regarding receiving pay to vendor and services. Multiple
hands are involved for receiving invoices and other activities due to this reason also so many
problem are occurred. Not to be priorities the collection of invoices and gathering information
from every department. Process not integrated with each department and as well as with the
vendor or supplier.
Future:
In future system will
be integrated with all the departments. Services, receiving invoices data integrated and automated reports
generated in all the departments of accounts payable system. There would be a single point of
integration information gathering quickly and quickly response to vendors. This system will meet
the requirements and generating reports to each department. This system will help to make
decisions effectively.
Current to future – GAP
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Current situation of system
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Identification of problems
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Redesign the process
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Future model provide the integrated
model
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Approval:
As
I reviewed the whole document and I accept it all the terms and conditions I
did not found any un necessary commitment. So in future if any problem occur I will never
claim.
Sign
by the CEO of the company ________________________________________
Sign
by the manager
_________________________________________
Sign by the supervisor
____________________________________________
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