Full cycle Accounts Payable meaning in SAP

Full cycle Accounts Payable meaning in SAP

Full cycle Accounts Payable meaning in SAP

SAP accounts payable is often used for the vendors to record and control their accounting data as only as per the vendor request all deliveries and invoices are managed. On the other hand, payables are controlled by the payment program and all the payments can be carried out using electronic transfer, checks, transfer etc. Along with this, updates in general ledger are made about all the postings of accounts payable. This also maintains reports to keep track of all items. All companies like Stechies.com have two major business cycle: the expenditure cycle and the revenue cycle. Completing all necessary accounting activities within a business activity is known as a full- cycle accounting and is a part of the bigger expenditure and purchasing cycle as it comprises of approving invoices, recording payments, matching documents and issuing checks. To move forward we need to understand the three major terms here that are involved in accounts payable process:

  1. Purchasing report: a purchase report is send to the vendor by the purchasing authorities when the company requires a purchase. In this, there will be product required, its price and its quantity. This then triggers the vendor to send the goods.
  2. Receiving report: After the company has received the goods, a receiving report will be made mentioning about the goods the company has received. So if there is any problem in the shipment, it is noted down in this report.
  3. Vendor invoice: This basically means the “payment process”. The vendor sends an “invoice” to request its payment to the accounts payable.
  4. Once all the goods are verified(as mentioned on the invoice) by the accounts payable, invoice is approved for payment. This can be done through a voucher, signature or stamp.
  5. The accounts payable mails the invoice to the company and then the payment is approved to be “successful”.

The invoice is mainly done in two ways that is two way matching and three way matching. So lets see what is the difference between two way matching and three way matching of invoices:

  • Two way matching of invoice
  1. The invoice is received by the department from the supplier relating the purchase order.
  2. Invoice is made in accounts payable module and cross checked to the purchase order mentioned in the invoice received.
  3. During the online invoice process, it is made sure that all the tolerances are met and the payment is completed at its earliest.
  • Three way matching of invoice
  1. In this, the invoice is received by a central location department.
  2. The appropriate and approved data(by the central location department) is then entered in Oracle receiving form mentioning about the quantity received from the supplier.
  3. This form is then forwarded to the company to make the further process.
  4. Then again, the accounts payable department completes the process.
  5. It either calls someone from the supplier side to receive the invoice or mails the invoice. Then the payment is said to be completed.



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