Managing business expenses is a crucial job for employees, and that is what the accounts payable department deals with. Anything that is purchased by the company is directed towards the accounts payable department. Here, the invoices are put into records, approved, and directed to the respective department for payment.
Accounts payable keeps track of all company expenditures and keeps archives for reviewing and auditing purposes. Therefore, for a company to operate competently, it needs to develop and maintain proper accounts payable processes to continue business activities.
An important part of this process is report building. In this article, we shall discuss report building in accounts payable and everything else you might need to know about it.
Report building for accounts payable
Report building is tracking all expenditures and funds used after a fixed time. The reason why report building is such an important task is that it gives you a transparent view of the expenditure standings and credibility of your company.
The need for proper tracking and report building arises from the necessity to make sure that all your suppliers are paid on time and that your company does not have any dues. As accounts payable deals with any expenditure and use of funds by the company, despite the mode of payment, cause, or nature of the transaction, generating reports for it can give you a proper insight into the expenditure behavior of your company. It also helps in reviewing budget and expenditure strategies, management of cash flow, verification of bill payments, as well as providing reports for auditing.
Companies need to work to put together a well-established process that can track and generate proper reports. Although the period for report generation may depend from company to company, the usual tenure is for a month. However, developing the proper report-building process is the main point of concern.
Building reports — the traditional method vs. modern approach
There are various types of reports out there that you can use and reap the benefits of. However, before that, you first need to come up with a way to generate the reports in the first place. Previously, when there were no digital aids, these reports were done manually. The hurdle was, it would take too long and require too much effort just to come up with one report. After all, the processes would involve manually going through invoices and relevant data to compile the report. So, even if it was done once in a few months, it would take a long time to prepare for it.
However, the situation has changed drastically over the last few years, thanks to the advancement of technology. Now, the entire AP process can be automated. This includes receiving invoices, collecting data, approval of said invoices, storing and archiving them, and even resolving them. All of these steps are done with the help of smart technology and AI and do not require any human interference.
The same applies to report building. Employees need not go through weeks of materials and data to compile a report. Instead, the system itself can compile data into a report for you at a scheduled time.
As a preparation, you only need to set the automation for the reports, and the rest can be done by the system. This method is quicker and more efficient. Also, unlike the traditional method, which is prone to human errors, this method eliminates any room for error while ensuring accurate data.
Also, with modern software, there are different types of in-built report systems. This means you need not even prepare the automaton as they already exist. The major few reports are as follows:
- AP Aging Report
Reports on invoices that are about to be due soon or are past their due dates
- History of Payment Report
Reports on all payment transactions for a specified period
- Voucher Activity Report
Reports on payment vouchers over a specified period
- AP Trial Balance
Reports on all vendor payments and any subsequent errors
- Reconciliation of Accounts
Reports on all transactions related to company debt
A good report should be able to give you all the necessary data accurately and effectively without costing you time, effort, or funds. As accounts payable is an important department of your business and a source of important business data, you need to ensure that there is a good process of report building in place here.
However, with the traditional method of manual reporting, you would end up investing too much time and effort with no guarantee of accurate data. Therefore, the best solution here is to adopt AP automation. AP automation comes with a great many benefits, of which report building is one prominent advantage. Henceforth, you will not have to worry about setting a special team just for making reports every time because the system will do it all for you.