Accounts Payable & Receivable Management

Vendor and customer master maintenance, invoice processing with three-way matching on the payables side, invoice generation and credit control on the receivables side, TDS application and tracking, monthly GST ITC reconciliation against GSTR-2B, structured aging and collection follow-up, vendor payment runs, monthly bank reconciliation, and monthly MIS reporting including DSO and DPO metrics. The exact scope is confirmed in a written engagement letter before work begins.

Accounts Payable is what your business owes to others — vendors, suppliers, service providers — for goods or services received on credit. Accounts Receivable is what others owe to your business — customers who have purchased on credit terms. AP is a liability on your balance sheet; AR is an asset. Managing both well is what keeps your cash flow healthy even when your Profit & Loss statement shows a lag between earning revenue and actually receiving cash.

Three-way matching compares the purchase order (what was ordered), the goods receipt note or service confirmation (what was actually received), and the vendor invoice (what is being billed) before a payment is approved. Without this check, businesses are exposed to duplicate payments, payment for goods never received, and inflated or fraudulent invoices going undetected.

TDS (Tax Deducted at Source) must be deducted at prescribed rates on specified categories of payment — for example, contractor payments, professional or technical fees, rent, commission or brokerage, and purchase of goods above the notified threshold — before the vendor is paid. These categories were governed by sections such as 194C, 194J, 194-I, 194H, and 194Q of the Income-tax Act, 1961; with the Income Tax Act, 2025 now in force, the underlying deduction obligations continue but section numbering has been reorganised, so we confirm the current corresponding provision at the time of application rather than relying on legacy section references. Correct category-wise application at the point of invoice booking, not as an afterthought, avoids both under-deduction (interest and disallowance risk) and over-deduction (vendor relationship friction).

If TDS is not deducted where required, the corresponding expense can be disallowed for income-tax purposes — commonly up to 30% of the expense — increasing your taxable income (this disallowance was codified under Section 40(a)(ia) of the Income-tax Act, 1961, carried forward in substance under the Income Tax Act, 2025). Interest is levied for short deduction or late deposit, and late TDS returns attract a statutory fee, under the corresponding provisions currently in force. Consistent, category-wise TDS discipline embedded into the payables process avoids all three exposures.

GSTR-2B is an auto-generated, static statement on the GST portal listing input tax credit (ITC) available to a business based on what its vendors have reported in their GST returns. ITC should be claimed in GSTR-3B only to the extent it is reflected and eligible in GSTR-2B. Monthly reconciliation between your purchase register and GSTR-2B identifies vendors who have not reported invoices, ITC eligible but not yet claimed, and ITC claimed in error — before it becomes a department notice.

Our aging-based collection cadence flags accounts as they cross each threshold — a courtesy reminder at the due date, formal follow-up at 15 days overdue, an escalation call or letter at 30 days, and CA-led intervention for balances beyond 60 days, which may include revisiting credit terms, requiring advance payment for future orders, or, where necessary, formal recovery steps. We work with you to decide where the line is between relationship management and firm collection action.

DSO (Days Sales Outstanding) measures the average number of days it takes to collect payment after a sale — a lower DSO means faster cash conversion. DPO (Days Payables Outstanding) measures the average number of days you take to pay vendors — a higher DPO (within agreed terms) means you are using vendor credit efficiently to fund operations. Tracking both monthly gives management a clear, comparable view of working-capital efficiency over time.

Yes. PNPC has operating offices in Chennai, Bangalore, Hyderabad, and Dubai, and regularly manages AP/AR for businesses with cross-border vendor or customer relationships. This includes withholding tax on foreign vendor payments with DTAA relief consideration (governed by Section 195 of the Income-tax Act, 1961, and its corresponding provision under the Income Tax Act, 2025 now in force), Form 15CA/15CB coordination, export receivables tracking against FIRC and RBI-mandated realisation timelines under FEMA, and UAE-side VAT and payment documentation where the business also operates in the UAE.

Export proceeds must generally be realised (i.e., actually received into India) within the period prescribed under FEMA regulations currently in force — commonly a period of up to 9 months from the date of export, though specific timelines can vary by RBI notification and sector. We track each export invoice against the corresponding FIRC (Foreign Inward Remittance Certificate) as part of the AR process to flag any invoice approaching the realisation deadline.

Monthly, as a standard part of the engagement. Bank reconciliation, vendor ledger tie-out, and customer ledger tie-out are performed every month-end, alongside an updated aging schedule. This keeps your books audit-ready continuously rather than requiring a compressed reconciliation exercise at year-end.

We work within your existing system — Tally, Zoho Books, QuickBooks, SAP Business One, and other common platforms — rather than requiring you to migrate to a specific tool. Where a business has outgrown spreadsheet-based tracking, we advise on the right upgrade path based on transaction volume, budget, and integration needs.

Payment execution — the actual bank transfer or cheque issuance — remains with your authorised signatories for control and security reasons. PNPC prepares the payment run, applies the approval workflow, verifies TDS application, and generates payment advice documentation; your team executes the final release. This separation of duties is itself a fraud-control best practice.

Every invoice is checked against the vendor ledger and prior payment history before being included in a payment run, using invoice number, amount, and date as matching criteria. Combined with three-way matching against PO and GRN, this substantially reduces the risk of the same invoice being paid twice — a surprisingly common leakage point in manually managed AP.

A credit control policy sets out customer credit limits, payment terms, criteria for extending or restricting credit, and the escalation process for overdue accounts. We help design or refine this policy based on your industry norms, customer concentration, and risk appetite, then apply it consistently through the AR process rather than making ad hoc credit decisions deal by deal.

Reconciled AP/AR ledgers, aging schedules, vendor and customer balance confirmations, and TDS/GST reconciliation working papers are exactly what a statutory auditor requests during year-end audit. Maintaining this discipline monthly, rather than compiling it retroactively at audit time, materially reduces audit queries, audit duration, and the risk of qualified opinions related to receivables provisioning or payables completeness.

A provision for doubtful debts is an accounting estimate that recognises the likelihood that some receivables will not be collected, reducing the reported value of receivables to a more realistic, recoverable amount. Applicable accounting standards require businesses to assess this at each reporting date based on ageing, customer-specific risk, and historical loss experience — it is not optional once objective evidence of impairment exists.

Yes. Monthly GST ITC reconciliation against GSTR-2B throughout the year, combined with correctly classified AR invoices, means the figures feeding into GSTR-9 are already reconciled rather than requiring a retrospective reconstruction exercise. This significantly reduces the effort and error risk in annual GST return filing.

PNPC prices AP/AR engagements based on transaction volume (number of vendor invoices and customer invoices processed monthly), the complexity of your business (single entity versus multi-entity, domestic-only versus cross-border), and whether the engagement is standalone or bundled with broader outsourced accounting services. The exact fee is confirmed in writing before the engagement begins.

Yes — this is one of the more common reasons businesses engage us. We assess the current state (backlog, reconciliation gaps, TDS/GST compliance status), propose a cleanup plan for the backlog, and transition to a managed monthly cycle once the books are current. In-house staff, where retained, can be redeployed to higher-value finance work while PNPC handles the transactional AP/AR cycle.

Onboarding, vendor/customer master cleanup, and historical ledger reconciliation typically take 2–4 weeks depending on transaction backlog and the state of existing records. The managed monthly cycle — invoice processing, payment runs, collection follow-up, and reconciliation — begins running in parallel and reaches full steady-state within the first one to two full monthly cycles.

Where e-invoicing is applicable to your business under the GST e-invoicing mandate (based on your aggregate turnover threshold as notified by CBIC), we generate invoices in the compliant e-invoice format with IRN (Invoice Reference Number) generation, and coordinate e-way bill generation for goods movement where required, as part of the receivables invoicing process.

AP/AR management is a specialised layer that sits on top of, or alongside, general bookkeeping — it focuses specifically on vendor and customer transaction cycles, whereas day-to-day accounting covers the full range of transactions including bank, payroll, fixed assets, and journal entries. Many clients engage PNPC for both as an integrated outsourced accounting engagement so the two are never out of sync.

Vendor master changes (particularly bank account detail changes) are verified independently before being updated, invoices are matched against PO/GRN before payment, payment runs require documented approval from an authorised signatory, and unusual patterns (new vendors with immediate large invoices, repeated near-duplicate invoice amounts) are flagged for review rather than processed automatically.

Yes. Once the AP/AR aging schedules are current and reliable, we can project near-term cash inflows (based on receivables aging and historical collection patterns) against near-term cash outflows (based on payables due dates and payment terms) to give management a rolling short-term cash flow forecast — a natural extension of well-managed AP/AR data.

Industries such as retail, textiles, and certain B2B distribution models often have extended credit cycles or seasonal payment patterns around festivals. We work with you to build these known seasonal patterns into the aging thresholds and cash flow forecasts, rather than flagging every seasonally delayed payment as a collection emergency.

Yes. Service businesses have receivables (client invoices for services rendered) and payables (vendor bills for subcontractors, software subscriptions, professional services, and overheads) just as goods-based businesses do. The three-way matching on the payables side is typically simpler (PO/engagement letter and invoice, without a goods receipt note), but TDS, GST classification, and aging discipline apply equally.

Disputed customer invoices are flagged separately from the standard aging schedule so they do not distort collection metrics, and are tracked to resolution with documentation of the dispute reason. Disputed vendor invoices are held from the payment run pending resolution, with the reason for hold documented, rather than being paid by default or ignored indefinitely.

AP/AR management is a distinct service from statutory audit and income tax return filing, though the two are closely connected — clean AP/AR ledgers make audit and tax filing significantly smoother. PNPC offers statutory audit, income tax filing, and GST filing as separate services, and many clients bundle these together with AP/AR management for a fully integrated engagement.

Standard monthly deliverables include an updated aging schedule for both AP and AR, a vendor and customer ledger reconciliation summary, a GST ITC reconciliation report, DSO/DPO trend metrics, and a cash flow summary. Additional or customised reports (by customer segment, by vendor category, by branch/entity) can be added based on management's needs.

An in-house AP/AR executive brings dedicated attention but no built-in CA oversight on TDS section application, GST ITC reconciliation nuance, or cross-border compliance — errors surface only at year-end audit or a department notice. PNPC brings the transactional discipline of a dedicated team combined with the technical oversight of a CA firm that has managed AP/AR across hundreds of client engagements since 1986, at a cost that scales with your transaction volume rather than a fixed salary regardless of workload.

Yes. The engagement is structured to scale with transaction volume — as invoice counts grow, we adjust team allocation and, where warranted, recommend moving from spreadsheet-supported processes to ERP-integrated workflows. This is discussed proactively as part of the ongoing relationship rather than left until the existing process visibly breaks down.