Accounts payable report can offer in-depth, and powerful insights about your business spend. They are critical as they help you to realize the financial objectives of the organization. If ignored, they can negatively impact the company and result in increased transaction expenses for the business.
An excel-based reporting is tedious because it has large chunks of data having multiple columns, rows, and gets extremely difficult to process the information. A finance automation tool can help in providing real-time reports with interactive graphics so that you get complete visibility on your business spends.
Why is it essential to analyze AP report?
Accounts payable report provide an in-depth analysis of business spending and an effective way to manage it. Organizations can set up their financial objectives based upon the accounts payable report. It helps in analyzing the types of spends happening in the organization such that finance teams can look into various ways to reduce the expenditures. Finance teams can identify any roadblocks and plan such that it gets avoided easily.
The accounts payable report has to be reviewed every month. By doing so, you can identify the payouts that are happening and keep a tab on the financial health of the organization. You can spot any roadblocks and find out ways to address them. It provides you the much-required information about the cash flow situation in your organization, and based on that you can plan your organizational objectives.
What to analyze in Accounts Payable report?
Invoice Payments – Every vendor sends out an invoice, and you end up paying them. However, some vendors do give credit notes varying from weeks to months, depending upon the agreement. In this case, you can take it as an advantage and prioritize those vendors who’re to be paid first. This gives you a leeway to pay other vendors after some time and adjust your cash flow accordingly.
AP Trial Balance– Running an AP trial balance month over month gives complete visibility on the payouts happening and helps in identifying any miscalculations or delayed vendor payments. The process is similar to balancing a checkbook in which each payment made has a matching entry in General Ledger. Any payments made to the vendor having no entry or incorrect details are red-flagged, indicating that the vendor might have been overpaid, underpaid, or not payment has been processed.
Voucher Activity – AP vouchers serves as an essential part of the accounts payable workflow. They work as a middleman between the time a vendor invoice is received, and until the time it is paid. A voucher consists of a payee name, payment terms, due amount, date and an authorized signatory for payment. Regular checks on the voucher activity report will get you a snapshot of total expenditures, payments made, and the remaining payments to be made.
Accounts Reconciliation – The reconciliation report shows the accounting activity related to issued payment for that voucher at a specific time. By analyzing this report, the finance team get a complete first-hand visibility on the payouts that is happening. This gives an indication that payments are happening to the right vendors at the right time and ensuring that business doesn’t have much liability.
Payment History – The payment history report shows the historical payment made from the organization to the vendors. It depicts the entire business spends made and allows companies to track them such that the organization does not go over-budgeted. Frequent analysis of the historical records gives you a complete indication of the financial position in your organization and allowing you to compare the projected vs. actuals.
Which is the best software to analyze AP report?
A finance automation tool like Finly can help you in automating the reports of accounts payable and help you to reduce business costs. The machine-learning powered finance automation software allows businesses by gaining complete control & visibility in streamlining and automating their accounts payable.
By using a finance automation tool like Finly, companies have more control and visibility over processes and data, thus having a higher team efficiency and allowing finance teams to be more productive by enabling them to make data-driven decisions.