Accounts Payable

The purpose of Accounts Payable (AP) is to record and disburse payment for purchases of goods or services. AP tends to be the final step in the purchasing chain of events and includes the following processing:

• Payables/Claims: Requests payment for goods received and services rendered.  This process establishes a payable in the system and, if specified, liquidates the encumbrance.
• Disbursements: Liquidates the payable, and generates payment. The payment may be in the form of a warrant or Electronic Funds Transfer (EFT).
• Disbursement Reconciliation: Stores information to reconcile Advantage payments with banking transactions.
• Check Cancellation: Cancels checks/warrants and EFTs in the financial system.
• Special AP Processing:

1. Procurement Card: Supports credit card purchases, typically for small dollar payments.
2. 1099 Reporting: Collects 1099 data and generates data files that may be used to generate 1099 forms for external vendors as well as reporting information that will be sent to the IRS.
3. Retainage: Some specific contracts hold a percentage of each payment until the terms of the Award have been completed. At that point, final payment is either released to the vendor or a third party, or may be forfeited.

Accounts Payable - Criteria for Measuring Success:

• Automated Workflow is used to improve process efficiency and expedite approvals within the payment process.
• The aging of pending payments (e.g. payments that exceed due dates by 10, 30, and 60 days) are tracked in order to limit late payments and potential interest and penalty payments.
• Pre-encumbrances are automatically recorded and encumbrances are automatically liquidated as purchase orders are processed.
• Inter-governmental transactions should be supported by the ability to record encumbrances between other Departments/funds with appropriate reporting for financial statement purposes.

Examples: How it might affect you …