We talked about vendor analysis and reporting and query management in the last post –

http://faoblog.com/processes-ap-vendor-management-other-processes2/

Let’s talk about the following processes:

  • Vendor Account reconciliations
  • Payment Settlement

Vendor Account reconciliations

This process is really a good candidate to outsource to the shared center / an outsourcer. There will always be a need to reconcile accounts. At the start level, the processes will comprise of doing reconciliations and informing the client of the un-reconciled items in the vendor ledger.

At the next level, the processes will incorporate reaching out to the vendor for queries and clarifications, requesting vendors for statements and collecting evidence for reconciliation entries.

The differences in the accounts statements as maintained by the vendors and as maintained by your client can arise of various factors:

  • Different quantity of material sent and received vs. ordered
  • Purchase returns and rejected material
  • Material failing quality acceptance
  • Damaged delivery
  • Different discounts / early payments / interest on delayed payment adjusted
  • Non-receipt / application of remittances
  • Material lost / damaged in transit
  • Transportation cost components
  • Material delivered to an incorrect address of your client

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