Question

Please create a narrative/summary for the given business process diagram.

Payment Process Purchasing Department Mail Room Cashier Accounts Payable Vendor Purchase Orders Receiving Reports Invoices Post Cash Payments Journal transaction to A/P Subledger on a daily basis. Invoice Compare invoice with purchase order and receiving report Prepare check and update cash payments journal Yes Do all three match? Add invoice to database, file invoice, and notify Cashier. Cash Payments Journal No AJP Subledger Check Invoice Invoices Invoice Vendor Vendor File

Answer 1

For a product related purchase, a purchase order, Goods receipt note/receiving report and invoice is prepared. The purchasing department matches invoice received from vendor with purchase order and receiving report. The quantity in the invoice is matched with quantity in receiving report while the amount/unit in the invoice is matched with amount/unit in the purchase order. If all the three match, the invoice is filed, added to the database and it is notified to the cashier. If the three way match fails, then the invoice is put on hold. In case the invoice is added is added to the database, the next steps involve cashier preparing check and updating cash payments journal. The check is made in the name of vendor. Once the payment is made to the vendor, the accounts payable team post cash payment journal transaction to A/P subledger. Posting to A/P subledger is performed on a daily basis.