An organization sustains itself by receiving money for its goods and services while spending on its ability to produce those goods. Accounts payable and receivable is a concept that is the same thing but has more layers. If you are a business, then accounts receivable and accounts payable are something you should add to your knowledge.
Almost all lenders and potential investors look at accounts payable and account receivables to judge the company’s situation. If they found them in a good equilibrium, it is good news for you. If not, then not so much. Today we’ll be telling you all there is to know about these concepts and how you can effectively manage these to maintain the stability of your business. Here’s everything you need to know about accounts payable and receivable.
What essentially is Accounts Payable (AP)?
Accounts payable (AP) is the amount you or your company owes to its suppliers or other creditors at a basic level. If your organization made a hefty investment, its payment might be considered part of accounts payable. Although accounts payable do not include payroll or long-term debt like a mortgage, it does consider expenses covering those long-term debts.
For example, if you buy an expensive smartphone on EMI, i.e., equated monthly installment, its total cost won’t be a part of accounts payable. However, the amount you pay each month will be considered in AP.
Receiving an invoice based on payment terms agreed to by both parties becomes what we record as account payable. The finance team of the company gets this bill for goods and services. They then record it as a journal entry and post it to the general ledger as an expense. As mentioned, accounts payable cover the expenditure that your company is making. However, the balance sheet shows only the total amount of accounts payable and not individual transactions.
● Characteristics of AP departments
After the payment has been done as per the contract terms and an authorized approver confirms this, the accounting records the expense as paid. AP departments are a crucial part of an organization and are responsible for processing expense reports and invoices and ensuring that payments are being issued on time.
A skilled AP team helps your company maintain a positive supplier relationship by keeping everything from updating vendor information to paying the bills on time. They also look for payment terms that favor the company and constantly hunt for discounts that save the company money.
● Two ways to record Accounts Payable
Companies can use the two most common ways to record accounts payable: accrual or cash-basis accounting. Accrual accounting allows finance teams to make unpaid expenses act as placeholders for cash events. On the other hand, cash basis accounting will enable companies to record the costs after paying the suppliers.
Accounts Receivable (AR) explained
Accounts receivable can be considered as the opposite of accounts payable. They are the funds that customers owe your company, for example, credits for products or services that your company provides. The total value of accounts receivable is also available on a balance sheet. Therefore, they are termed “current assets” on the balance sheets.
As the term might suggest, accounts receivable include all invoices that your client owes for items or services performed for them. Often, vendors tend to bill customers after providing services or products. This also happens when a contract between the two parties is signed and mutually agreed on terms. Generally, customers agree to pay a net 30, i.e.; they pay within 30 days. Net 60 and net 90 are also some available options.
● Accounts Receivable team
After the company delivers the goods or services promised to the client, the AR(accounts receivable) team sends the customer invoices and records the amount as account receivable. The team shifts the payment from receivable to deposit after the client has paid according to the contract. After that, the amount is no longer receivable. However, if customers fail to pay on time, the team must send a dunning letter and the original invoice with some late fees, if any.
● How Accounts Receivable are recorded
Accrual accounting makes it so that your receivable balance is termed under current assets. After invoices are paid, the appropriate liabilities accounts are credited by finance, and they also debit accounts receivable to account for the payment.
Conclusion
If we see it from one person’s perspective, every invoice that is made is payable for one party and receivable for another party. Both are recorded in the general ledger, one as a liability and the other as an asset. The company’s financial health depends directly on the status of these two.
Oracle is software that is very necessary to maintain a database for everyone. It has recently launched an extension, a low-code development platform that is cloud-based and can be managed easily. The users of Oracle APEX are often business analysts and IT-savvy people who want to create applications without asking for help from IT support. These are new classes of developers who are supported by this program; this is good for the entire community as it promotes the development of software via non-professional coders and helps expand people’s knowledge.
This article is a comprehensive guide on Oracle APEX, how you can use it, and its benefits.
What is Oracle APEX?
First of all, before understanding what APEX is, we need first to understand what Oracle is. Oracle is a DBMS, i.e., a database management system, enabling the user to input, manipulate, and find various forms of data into a database system. These systems can then be accessed through queries; these queries are often taken through another software by the name of SQL. SQL is useful software, even when you are using APEX. This brings us back to our original question, what is oracle APEX?
Oracle APEX is a software where you can develop your software while not knowing much about coding itself. It is a myth that you need to be a professional coder to make a good quality program, especially when you have an application like APEX to help you out. It also gives a faster response time when you make a program, unlike other software, which is slow to compile.
This puts APEX over other compiling software and helps you make programs quickly. Another critical factor that puts APEX above other software is that it can be well integrated with SQL. SQL allows you to get queries swiftly done and helps you make your software much more accessible.
How can you use APEX?
The APEX software is relatively easy to use. Here are a few steps which you need to keep in mind while using this software:
● First of all, make sure to create a workspace for yourself and your team. APEX is software that can be used by multiple users, giving it another edge over other software that performs the same function. This software usually is single-user software, but APEX is open-source software that multiple users can use simultaneously.
● There are various features to view the table and data you have inputted. You need to enter the queries, and voila, you get your answer, your data, and your tables. This is a massive advantage over other software; their lag time is much greater than APEX.
● You can create applications via this software. These applications can be desktop applications, web sheet applications, or mobile applications. What is even better is that these applications don’t require much coding. Being less coding-intensive means that you can devote time to making it look good and improving your user interface and user experience.
These were some uses of Oracle APEX that any user can do without being too involved with the IT department. Now, let’s look at the benefits of Oracle APEX.
Benefits of APEX
There are various benefits of using Oracle APEX over using other such software. Some of them are listed here:
● First, it is low-code development software. This software provides a guided, step-by-step procedure, and it is a browser-based, graph-based software that helps you make applications at an accelerated rate.
● It is a very responsive software, and as a cherry on top, the applications made in it are pretty responsive. You can include charts, graphs, and reports in your application to complete the work seamlessly.
● It is software that helps make applications fast. Not just that, you can also make changes in the applications seamlessly without causing any process complicated.
● You can also build apps with confidence, and it helps you calculate the statistics of your application accurately. This allows a lot during the development cycle of the application you are making.
● Finally, it helps make modern applications for modern times. This means that it is compatible with most file formats that devices nowadays support.
Conclusion
In conclusion, Oracle APEX is a handy software that helps you create applications and tables, manage data, and make sure that every aspect of your application is covered. Therefore, it is essential to know how it works and how you can take complete advantage of this software. Each part and every step is necessary; it helps you make beautiful applications without coding-intensive knowledge and helps you manage data. Hopefully, this article served as a guide to your introduction to Oracle APEX, and you’ll find beautiful applications for the software.
SMEs, or Small and Medium Enterprises, are a large group of businesses and companies that have just started their business journey or are in the middle of becoming a large business. Such businesses are not usually made for remote working or inefficient work because they need to increase their revenue to reach the status of a large corporation. During the pandemic, SMEs have greatly suffered due to the lack of workforce. However, now that the brunt of it is over, SMEs are getting revived through various means.
Shot of a young businesswoman using a digital tablet in an office
Accounts payable is an integral part of any business, be it small, medium, or large. How you manage your AP department in your business dramatically affects how your business will perform in the market. Automating the AP workflow is one of the best ways to make sure that you make the most of your resources. This article will highlight the effects of AP automation on SMEs and convince you to automate your AP workflow if you are an owner of an SME.
Digitalization
If you automate the entire AP workflow of your business, it is the first step to the digitalization of your company. Once the workflow can happen on software, it is easy to convert the rest of the business towards something that can be accessed remotely. This is very similar to large companies and is a step forward in the progress of an SME who has a good AP manager.
Good software does not just work on the niche AP management as it is supposed to. It also helps out in the management of various aspects of your company. SMEs have this advantage over large businesses; they can use simple software to achieve greater efficiency. Once this efficiency has been completed, you can work towards bettering the rest of your business.
Prediction
Another essential part of any business is what the future holds for them. The sales, the requirement of raw materials, and the production capacity, all need to be considered to find the perfect mix for a good AP prediction. Then, you need to set aside a budget for the same; this is not easy if your market demand is highly variable. This is often the case for SMEs; their demand is highly unpredictable; they might sell a couple of thousand products one month and might struggle to reach their monthly quota the next.
Automation of the accounts payable department uses specific software that helps predict the fluctuation in these demands. This allows the owners of the enterprises to plan their budget accordingly. This is a blessing for SMEs as this helps them set aside money for other essential jobs such as expansion, marketing, and sales.
Clear business case
AP automation has enormous effects on the cost per invoice of the business. Leaving a paper trail has multiple effects, from an environmental impact to costing a fortune for a small business. For large companies, amounts in five digits don’t matter as much, but for SMEs, optimization of their budget is the focus of their business. This means they need to earn the most profit while spending the least. Automating makes this feasible by cutting the cost of invoices from $15 to $2 (taking an example). If the company generates 1000 invoices a month, a physical copy would cost them $15,000, while the digital copy would just cost them $2,000.
There needs to be an upfront investment in many businesses; SMEs are often investment heavy for their owners. However, they need to be careful of the value of the money they get out of their assets. This is the case the business makes for itself; why is it worth investing in the industry.
Automation’s effects
A manual accounts payable system is very inefficient. In addition, there can be duplication of invoices which can cost you at least a couple of thousand dollars. This might seem like a small number if you are a part of a large enterprise, but this is the primary source of income for small enterprises. Automation completely negates these errors because all these calculations are being done by the software you are using. Therefore, the invoices generated won’t have any mistakes (until there might be a fraudulent vendor).
You need to be aware of the fraud that can occur in the case of accounts payable automation; if you can sort that out, no force can stop your business from prospering.
Conclusion
It is just a matter of how soon you can crack the way to work around the bottlenecks you face in your AP department. Once you figure it out, your business will flourish in all its aspects. Digitalization, predictions, and making a clear case for your business are significant advantages of AP automation that you should look into if you are an owner of an SME.
VAT, or Value Added Tax, is one of our homes’ most used financial terms. It is included in our food, any service we use, or any product we buy. Doesn’t this make you wonder what VAT is? This article answers precisely what VAT is, and as an extra bit of information, what are the latest trends in it. These four trends are prevalent throughout, as VAT is not localized to one place.
VAT is an expense that everyone has to bear. So making sure that you know all about it is very important. So read on ahead to find out the same.
What is VAT?
VAT is the short form for value-added tax. This is a concept that can only be understood through an example. Suppose you are the producer of a very famous product in the market. Everybody wants to buy your product, but as you are your factory owner, you cannot directly sell it to your consumers. So, you will sell it to your distributors. These distributors then sell this product to the retailers, and these retailers sell it to their customers. In all these processes, everyone is adding value to the product. This value will have some monetary value attached to it which is exactly what VAT is.
Now that the concept of Value Added Tax has been explained, let’s move on to the trends prevalent in the world.
Accelerated Introduction of CTCs
CTCs stand for continuous transaction controls. Over the last few years, what has changed is the importance of VAT for the businesses that pay it and the tax authorities. It has also seen a shift in its requirement types; this started with Latin America as early as the early 2000s. Other countries followed this, but the idea remains the same, VAT modes are changing, and so are its requirements. VAT has been shifting towards a more digitized method; this suits the vendors more and is easy to pay. These controls ensure that VAT is being paid correctly and that no one is misusing or avoiding this form of tax.
Due to improvements and betterments in the collection process, it has become much easier, and economic transparency has been enhanced to a greater level.
A Shift Toward Destination Taxability For Certain Cross-border Transactions
When transactions happen across borders, for example, imports and exports, customs are a hassle to be undertaken. They cannot be avoided when it comes to paper-based invoices; however, the digitization of payments, especially value-added tax, has helped various businesses overcome customs. Moreover, with the increase in trades, many rules have become lenient; VAT has been removed from multiple imports below a certain level. As a result, taxability has been reduced in cross-border transactions, primarily because they have become much more common than they used to be.
Earlier, cross-border services used to be hard to access, but now the ease of access has been turned up a notch. This is also one reason to reduce tax liabilities on cross-border transactions.
Aggregator Liability
We talk about making all the payments online using a single platform. This has caused a significant dependency on online platforms which help make transactions. If a tiny mishap occurs, the entire system might break down. You might have seen how all your transactions stop when one of your digital wallets freezes due to technical errors. Imagine that happening on a much larger scale, preventing these transactions from happening across countries. With new CTCs every day, these liabilities tend to increase a thousand-fold, making the interface an object of very high dependence.
Ensuring that everything proceeds smoothly is a big trend that needs to be taken care of. Often, such trends are the ones that need to be focused on to make sure the entire flow works correctly.
E-Accounting and E-Assessment
Ensuring that everything is accounted for and checked adequately is an essential part of the entire process. Assessment of this work is the final step to targeting high compliance with VAT. CTCs are made for this purpose, to make sure that these policies are complied with and executed well. In addition, periodic reporting is an integral part of VAT policies, and businesses need to take care of this.
Conclusion
In conclusion, VAT policies need to be taken care of by businesses, and the trends need to be followed to find the optimal rate. The business world is full of things you can add value from, so you need to be careful of any changes. Hopefully, this article helped you figure out what VAT is and the trends involved.
