Sometimes we set our eyes on certain things that are too much to afford. Then our desire turns to reality and we buy the commodity even before we have the required amount of money. And we take the commodity home, but we still haven’t paid the amount of money to the seller. So now this condition gets the seller termed as a creditor as he has sold the product on credit. And we become the debtor as we owe him the money for the commodity. So now a relationship is formed between the seller and us, which is called the ‘creditor-debtor’ relationship. And this sum of money that you are required to pay to the seller gets settled in your account as account payable and the following process is called the account payable process.
What is the account payable process?
As we had discussed the example above, we have to understand that the account payable gets settled in your account and is marked as a legal responsibility and is considered an account payable as long as you pay the amount of money. And also the relationship between you and the seller will last as long as you pay him the amount. This account payable process will get you tagged as responsible for paying the amount you owe the seller. You are legally bound in the relationship and you have to pay the seller and only after you pay him the amount will get decreased from your account. This is a very important process. And this also comes in the large scale.
Account payable processdealing with companies:
Let’s get some ideas as to how this account payable process is dealt with when it comes to large companies. Certain large companies usually have an accounts payable department for this process and some small companies have certain staff members or the owner or a bookkeeper to take care of this account payable process. The vendor from whom the company has bought a commodity or used a service will send an invoice which is also called a bill that contains all the details of the order and the commodities received to the accounts payable department of the company. But sometimes there may be some fraud invoices sent to the company and this can be prevented by using some internal controls. For further ideas on the account payable process there are umpteen sites on the internet to help you with this.