Overview
The AP Accruals process automates the identification, calculation, review, posting, and reconciliation of expenses that have been incurred but not yet invoiced or paid. It starts by ingesting data from your ERP and related systems, detects transactions that require accruals, applies configurable rules to calculate recommended accrual amounts, routes those recommendations through review and approval, generates journal entries for posting in the ERP, and then manages reversals and true‑ups as invoices arrive, all with full reporting and audit traceability.
Source Data Ingestion
Import AP, PO, receipt, and GL data from ERP and other systems.
Normalize and map to a consistent structure (vendors, POs, cost centers, GLs, entities).
Refresh data on a scheduled basis, with increased frequency around period close.
Accrual Candidate Identification
Scan for situations where expense has likely been incurred but not fully invoiced, such as:
Goods/services received with no matching invoice.
Partially billed purchase orders.
Contracted or scheduled services with missing AP entries.
Flag these as accrual candidates by vendor, PO, entity, account, and period.
Accrual Rules & Calculation
Apply configurable business rules to each candidate to determine:
Whether an accrual is required.
Which GL accounts, cost centers, and other dimensions to use.
How to calculate the amount (e.g., remaining PO balance, receipt‑based, time‑based, or threshold‑driven).
Compute recommended accrual amounts for the selected accounting period.
Review & Collaboration
Present recommended accruals in a centralized worklist for Finance/AP.
Allow users to accept, edit, or reject recommendations.
Capture comments and justifications for each decision.
Enable tagging or notifying business owners for additional input where needed.
Approval Workflow
Route accruals for approval based on rules such as:
Amount thresholds.
Entity, cost center, or department.
Vendor, category, or risk profile.
Provide approvers with a summarized view of:
Underlying source transactions.
Accrual logic applied.
Financial impact by GL and cost center.
Journal Creation & Export
Generate accrual journal entries once items are approved:
Debit expense (or relevant account).
Credit accrued liabilities (or configured balancing account).
Export journals as files or via integration for posting into the ERP.
Reversal & True‑Up
Schedule automatic reversal of accruals in the subsequent period, per standard accounting practice.
As invoices are received and posted:
Match them to existing accruals.
Clear or adjust accrual balances as needed.
Perform true‑ups for differences between accrued and actual invoice amounts and investigate long‑outstanding accruals.
Reporting, Controls & Audit
Provide dashboards and reports by entity, GL, vendor, period, and status.
Maintain a full audit trail from source data through rules, decisions, approvals, and journal exports.
Support internal controls, management review, and external audit requirements with transparent, repeatable processes.