Accounts Payable: The amount due to the
suppliers/vendors for the goods and services provided on credit.
Accounts payable Dept: It refers to the department within the
organization that manages Accounts Payable activity.
ERP: A large software application that is
implemented across a corporation, which helps it to coordinate across the
different processes in the enterprise.
It consists of modules supporting each of the key processes in the
corporation like order fulfillment, billing, supply chain, procurement, finance
& accounting, etc.
Invoice: Often termed a “bill” in colloqurial
speech. It is a commercial document
issued by a seller to the buyer, indicating the item(s) bought with the
quantity and agreed rate for the goods or services the seller has provided the
buyer. An Invoice specifies the amount
that the buyer needs to pay the seller of the goods or services.
Procurement: The team/ business function that is
responsible for vendor selection/ negotiation and placement of orders from the
vendor.
Receiving: The process of receiving products or
services supplied by the vendor at the customer’s
premises. The receiving activities also include checking for the quantity and quality
of the goods supplied.
Sourcing: The process of identifying suitable
vendors for supplying certain material / services.
Vendor: A person or a business which
supplies/sells certain goods and services to the customers as per some
pre-decided commercial terms.
Requisitions: This activity relating to the request
raised by the business users within the organization
for purchase of any goods/Services.
Goods: Any tangible material or item that is
purchased within an organization.
Services: A service is the non
material (tangible) counterpart of physical goods. A service compromises sequence of activities,
that doesn’t result in change in ownership of the outcome.
Working Capital: Money that is used to run the day to
day operations of an organization. This Money
is typically borrowed from banks and hence attracts interest costs.
Credit Note: A document generated by the seller giving
credit to the buyer for the goods returned or excess payment etc. It is called a “credit” note because it
credit (lower the assets/accounts receivables) the customer’s account.
Debit Note: It is a similar document
like a “credit” note. The only
difference is that it is initiated by the buyer instead of the seller.
Goods received note: the document generated by the buyer
indicating the quantity and Other
particulars of the goods received. It is
used by the seller as a proof of delivery of goods.
Invoice: A document sent by the
vendor/supplier/seller to the buyer, requesting Payments
for the goods/services provided.
Purchase requisition: An internal document within the
buyer’s organization generated by the
end user department and forwarded to procurement/purchase department. The purchase
Department
creates a purchase order based on receiving a PR.
Vendor Master: The data base maintained by the buyer
which contains a detailed list
of
all the vendors that the buyer purchases from.
Document Management
System: A software
tool used to store and manage digital documents or digital images of paper documents.
EDI: (Electronic Data Interchange) It
refers to the set of standards that enable a Structured
transmission of commercial data between organizations by electronic means.
ERP: (Enterprise Resource Planning) It is a
software tool which allows transactions from
all the business functions of an organisation to be recorded within it and
provide a
single view of the state of the business.
Indexing: The process of classifying a document
in a document management system by
assigning attributes like document number, date etc. And associations with
other documents. Indexing helps to search and retrieve
documents faster from the document management
system.
ISP: (Internet Supplier Portal) This refers to a
website created by a buyer for its vendors
for them to do transactions directly with the buyer. The kind of transactions done
by the vendors on an ISP are Acceptance of a purchase order, confirmation of
purchase orders, submission of invoices, enquiring about the status of payments on
the invoices etc.
Metrics: Measurements taken on an activity to
measure its quality.
Non-PO Invoice: The invoice which is raised for items
that were purchase with a PO.
PO Invoice: The process of converting a paper
document into a digital image and Storing
it on a computer.
Three way match: The process of comparing the contents
of PO, invoice and GRN to
clear the invoice for payment.
Two way match: The process of comparing the contents
of PO and invoice to clear
the
invoice for payment
Hold: A status assigned to the invoice while
further information and approvals are being
sought on it from the client.
Account code: A numbering system given to specific
kinds of work for the purpose of
organising
the cost control process of a specific project or department.
Payment batch: A computer program in the ERP
environment, which identifies all the Invoices
that need to b e paid and creates a list of payments to be made.
Payment batch name: Unique name to identify the payment
batch. Different companies use different formats for defining this name.
Payment date / Value
date: Payment Date is
the date by which the supplier can expect the
money in his account.
Pay-through date: Pay through date is the date, until
which the invoices due for payment will be picked up in the payment batch.
Payment run date: The date on which the payment process
is executed.
Payment Currency: The currency in which payments get
transacted.
Payment Document: Payment Document is the document
through which the payment are made. There are various types of documents for
various payments created in the ERP. There
is one document created for each payment.
Payment register: The payment documents created in a
single payment run are combined
into
a payment register
Service Level
Agreements: (SLAs)
These are the agreements between the Centralisation service
provider and the client where client’s expectations out of the process Centralised
are
documented. These SLAs are measured
through various performance metrics.
Vendor Helpdesk: It is team which receives and responds
to vendor queries about whether the invoices have been received and found to
be in order, when the payments can
be expected etc.
Workflow: It is a tool which allows for a
transaction to be defined as a series of tasks
and
automatically assign the transaction to the next person when the initial task
has
been
completed.
Asset: An asset is a source of current or
future economic benefit for the business e.g. cash,
Money
receivable from the customers, land, buildings, machinery, vehicles etc.
Cash-in transit: This indicates an asset account in the
company’s books of accounts. It is
used to
indicate the money that has been paid by the company but is not reconciled
against
any other liability
that the company had to pay or against an asset that the company acquired.
Credit entry: The entry which indicates source of
funds i.e. a decrease in an asset, increase
in a
liability or increase an income or profit.
Debit entry: The duality principle requires us to
maintain accounts by making double entries
together one
for credit and one or more for debit or vice versa. Where amount under credit
is equal to
the amount of debit.
Duality principle: The principle of accounting which
states that each transaction has two
aspects i.e.
source of funds (credit) and use of funds (debit) and that in any transaction,
amount
of debit is
equal to amount of credit. This
principle is the foundation of the double entry system
of
accounting.
Expenses: The money spent by a business on it
day to day operations.
General Ledger: The general ledger, sometimes known as
the nominal ledger, is the main accounting record of a
business which uses double-entry bookkeeping.
It will usually include accounts for such items as
current assets, fixed assets, liabilities, revenue and expense items, gains and
losses.
Income: The money earned by a business due to
its day to day operations
Liability: It is a source of current or future
economic obligations of a business e.g. monies payable To the
vendors, loans taken from lenders etc.
Month-end process: The process followed by an
organisation to close the books of accounts/
financial at
the end of a month. This is done to
prepare reports and financial statements at the
close of
month end.
Subsidiary Ledger: (Also called
sub-ledger) This is
the supporting ledger of related accounts. The balance
of all sub-ledgers of the same type should reconcile with the general ledger
balance.
Withholding tax: It is an amount withheld by the party
making payment to another (Payee) and
paid to the
taxation authorities. The amount the
payer deducts may vary, depending on the nature of the
product or service being paid for.
