Accounts Payable & Receivable Management: The Process, Start to Finish
The mechanics of Accounts Payable & Receivable Management are what clients ask about once they have decided to proceed. The questions below are the ones raised most often in practice; the full scope of the service is on the Accounts Payable & Receivable Management page.
What exactly is included in PNPC's AP & AR management service?
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.
In practice: We scope every engagement around your actual transaction volume and existing systems — a 30-invoice-a-month business and a 500-invoice-a-month business need very different process designs, and we price and structure accordingly.
What happens if TDS is not deducted or deposited on time?
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, which applies from tax year 2026-27 with renumbered sections — confirm the equivalent provision). 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.
In practice: This disallowance exposure can be one of the more significant tax risks in a books cleanup — it directly increases taxable profit for an expense that was genuinely incurred but not properly documented at source. We track the current section references under the law in force at the time rather than assuming legacy numbering still applies.
How does export receivables tracking work for FEMA compliance?
Export proceeds must be realised and repatriated (that is, actually received into India) within the period prescribed under the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, as amended. The period depends on the type of export and has been revised during 2026, and the AD bank can extend it on request in specified cases, so confirm the current period for your export category with your AD bank. 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.
In practice: FEMA export realisation timelines are subject to periodic RBI updates — we always confirm the current prescribed period applicable to your specific export category before flagging a deadline, rather than relying on a fixed assumption.
How often do you reconcile vendor and customer ledgers?
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.
In practice: Monthly reconciliation is the single biggest differentiator between books that pass audit smoothly and books that generate a long list of auditor queries at year-end.
Do you handle vendor payment execution, or only the approval workflow?
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.
In practice: Keeping payment execution with the client, separate from the party that prepares the payment run, is a deliberate control design — not a limitation. It protects both parties.
How do you prevent duplicate vendor payments?
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.
In practice: Duplicate payments are more common than most business owners expect, particularly around vendor invoice resubmissions or when multiple people can initiate payment requests without a single source of truth.
What is a credit control policy, and does PNPC help design one?
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.
In practice: Businesses without a documented credit policy tend to extend the most generous terms to the customers who ask the loudest — not necessarily the ones with the best payment history. A written policy removes that inconsistency.
How does AP/AR management fit with statutory audit?
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.
In practice: Handing audit-ready AP/AR files to the statutory auditor as a matter of course can shorten the audit, because the reconciliations the auditor needs already exist.
Can AP/AR management help with GST annual return (GSTR-9) reconciliation?
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.
In practice: GSTR-9 reconciliation is far less painful when the underlying monthly AP/AR data has been clean throughout the year — this is one of the strongest arguments for ongoing AP/AR management rather than year-end catch-up.
Where this sits in the wider engagement
Accounts Payable & Receivable Management rarely arrives on its own. The statutory basis and the current requirements are set out on the Accounts Payable & Receivable Management service page, and the related services are grouped under Accounting Payroll.
What PNPC does
PNPC Global has practised since 1986 across India and the UAE. On Accounts Payable & Receivable Management we take the work end to end — reviewing the facts, preparing and filing what is required, and dealing with the authority through to closure.