ACCOUNTS PAYABLE 992020 1 Introduction l What is

ACCOUNTS PAYABLE 9/9/2020 1

Introduction l What is Accounts Payable ? l Accounts Payable Process l Invoice processing l Payment processing l Review 9/9/2020 2

Accounts Payable Money owed to supplier or vendor for goods and services rendered. 9/9/2020 3

AP Process Flow l Purchase Order Issued to Vendor on meeting the requisites. l Vendor sends Materials to Site and invoice to AP l Updating Receipts by warehouse and issue of RT# l AP Processor matches the Invoice l Re work on Discrepant invoices by Resolution Team l Payment on Invoices Ready for Payment as per Payment Term and Payment Schedule. l Replying and Updating vendor/Buyer Queries Invoice Status 9/9/2020 4

AP Flow Requirement for material / service arises Supplier is contacted / Terms & Conditions for supplies are agreed Purchase Order is placed Vendor supplies the Material to Plant and sends the invoice to Payment Team makes payment on due date As per payment schedules 9/9/2020 Processes Invoices High Level AP Flow 5

PO Creation Requirement for material / service arises Create agreement and Communicate Purchase Order to supplier 9/9/2020 Reaches the requisitioner Designated authority approves the purchase Analyze the quotations Requisitioner gets in touch With sourcing Quotations received from supplier PO creation activity is done by buyer Analyze the vendor / supplier Create a request for quotations 6

Payment Mechanism NO Vendor supplies the material Received by requisitioner Requisitioner inspects the good and ensure that they are as per the order Returns the goods YES Goods are accepted Receiving is done / RT# (Goods Receipt Note ) is issued If invoice, receiving and PO details matches then invoice is passed for payment Automatically. Else if the invoice gets blocked, payment will go after resolving the Invoice. Paid on due date 9/9/2020 Activity at Buyer’s site Three way matching (Invoice, Purchase order and Receiving) 7

INVOICE PROCESS l Courier Receiving/ Sorting and Bar coding l Scanning of Hard copy Invoices as per Sites/Types and routing the same to WORKFLOW Image Package l Processor selects Invoices as per JD in WORKFLOW Check for Mandatory Process Requirements l Processed/ Registered in BAAN (ERP Package) Moved for matching stage l Match Inv PO/Line RCPT/GL code l Approval of Perfectly Matched Booked to GL- Invoice –in BAAN/ Done Processing in WORKFLOW l Quality checking before finalizing the batch l Finalization of Batches 9/9/2020 8

PAYMENT PROCESS l Selection of due invoices for each vendor l Getting approval from site finance & modifications if necessary l Composing & finalizing the batches selected for payments. l Uploading to Citi-direct l Directly hit the supplier bank account. 9/9/2020 9

ACCOUNTING ENTRIES – PO Invoices 1. l l 1)When goods received Dr. Inventory A/c Cr. GRNI A/c 2) When invoice is registered Dr. Registered Invoice A/c Cr. Vendor /Trade AP Account A/c 3) When invoice is Matched No JE 4) When the invoice is approved Dr. GRNI A/c Cr. Registered Invoice A/c 5) When Payment Made Dr. Vendor /Trade AP Account A/c Cr. Bank Account A/C 9/9/2020 10

ACCOUNTING ENTRIES – Non PO Invoices l 1)When Services rendered Dr. Expense Account Cr. Vendor /Trade AP Account A/c 2) When Payment Made Dr. Vendor /Trade AP Account A/c Cr. Bank Account ACCOUNTING ENTRIES – Contra Account Transaction l 1) Reversal/Canceling a Transaction (Positive) Dr. Vendor /Trade AP Account A/c Cr. Contra Account 2) Reversal/Canceling a Transaction (Negative) Dr. Contra Account Cr. Vendor /Trade AP Account A/c 9/9/2020 11

ACCOUNTING ENTRIES – IPV l 1)For Favorable PPV Dr. Vendor /Trade AP Account A/c Cr. IPV A/c 2) For Unfavorable PPV Dr. IPV A/C Cr. Vendor /Trade AP Account A/c ACCOUNTING ENTRIES – AP Reserve Transaction l 1) Movement of Open Receipts to AP Reserve Dr. GRNI A/c Cr. AP Reserve Account 9/9/2020 12

Types of Invoices EDI l l l Provides translation channel through which invoice details can be exchanged between the buyer and the suppliers. EDI is defined as exchange of computer-to-computer, standard business documents in electronic format. It streamlines the paper process into an efficient and less time consuming electronic process. No Missing Invoices Non PO Invoices/Freight/Utility l Invoices which are not covered by Purchase order – Expenses/Services Credit Note/Debit Notes l l Credit Note Issued by Vendors are for Material returns and for Unfavorable PPV in any Invoice already billed/Rebate/Discount Allowed ( Considered as Invoice if its issued by Flextronics) Debit Note Issued by Vendor are for favorable PPV in any Invoice already billed. ( Debit Memo Issued by Site is Material returns and deduction from vendor accounts. 9/9/2020 13

Other AP Activities Resolving Blocked Invoices and clearing Vendor/Site Queries and Status Update/Recon l Clearing Blocked Invoices ( Buyers/Post Blocking/AP Exception/Wait for CN Q), Replying of Vendor/Site queries. l Status update of Invoices/Reconciliation of Vendor Statement SOX Requirements l Reconciliation of 80% AP Outstanding Vendor Balances – twice in a Year Reconciliation of 100% AP Outstanding Vendor Balances – Once in a Year l Cleaning of Unmatched Receipts Above 180 Days l Recovery/Clearing of Debit Balance Above 60 Days l Cleaning/Offsetting Negative Unmatched Receipts Above 60 Days l Resolving Challenge Invoices Above 90 Days. . l Internal Audit (RCTC/SOX)/ External Audit 9/9/2020 14

THANK YOU 9/9/2020 15