Invoice processing involves the handling of all incoming invoices from arrival to payment. Many companies prefer to outsource their invoice processing to a reliable third-party service such as bmsdirectinc.com. A journal entry plays an important part when it comes to invoicing. This article answers the question of – “What is the journal entry for invoice processing?”
When a company receives an invoice from a vendor or supplier for the goods or services provided, it’s known as a vendor invoice. Vendor invoices are entered as credits in the “accounts payable” section in the accounting books of a business. Such an entry is referred to as a journal entry. An invoice entered in the accounts book will increase the credit balance in the accounts payable section of the book. When the company pays off the vendor or supplier, it will reduce the Accounts Payable with a debit amount. An unpaid invoice is referred to as an open invoice.
The invoice is first reviewed and approved by the accounting team before it’s entered into the accounts payable section of the book. Once the invoice is approved, the recording process includes:
. A credit to the accounts payable section of the accounts book
. A minimum of one debit to another account such as an expense, a prepaid asset or a fixed asset
A journal entry is a common term in accounting. It’s simply a record of a business transaction in the accounting books of a business entity. A properly documented journal entry should consist of a proper date, description of the transaction, a reference number, and the amount to be debited or credited. The journal entry is the very first step in an accounting cycle. Today’s businesses use a double-entry accounting system. Hence, a financial transaction will impact at least two accounts. One account will be debited while another account will be credited. A journal entry will have equal debit and credit amounts recorded.
The purpose of a journal entry is to show how the specific account is affected by the transaction. A debit and a credit will complete a journal entry in the double-entry accounting system. For example, if a company purchases goods, it will increase the inventory as well as the accounts payable accounts. The journal entry is the very foundation for all other financial reports. Auditors will find it easy to analyze how financial transactions have impacted business with proper journal entries. That’s why journal entries are so important for business accounting.
Journal entry for invoice processing should be done by a highly qualified and experienced accounts professional. Most companies prefer to outsource their invoice processing work to save time and money in the long run. Invoice processing is a crucial part of accounts payable. It helps to manage all your payments effectively. When you outsource invoice processing, your work will be in the hands of highly skilled and trained professionals. Invoice processing companies have dedicated teams that specialize in the work they do. They know the ins and outs of invoice processing. That’s why they are able to do the work more efficiently and accurately compared to having your own team to do the work. That’s why you need to outsource the invoice processing work to a professional team like BMS Direct Inc.
BMS Direct Inc has the capacity and tools to do the work in real-time. You get to keep track of the entire operation in real-time. You can easily get all information about any invoice at any time you want. That’s why you need to choose a reliable invoice processing service such as BMS Direct Inc for all your invoice processing needs.
