Modulr Accounts Payable Accounts Overview

In this article we introduce Accounts Payable accounts, how they're set up and how to get the most out of them.

Upon the successful verification of the required Ultimate Beneficial Owners (UBOs) and Directors, a Accounts Payable account is created for your company's legal entity. This guide provides an overview of what a Accounts Payable account is, how it functions, and how it can be used as a key facet of your financial operations.

What is a Accounts Payable account?

An Accounts Payable account is an Electronic Money Institution (EMI) account that operates similarly to a bank account, though Modulr Accounts Payable itself is not a bank. This account is the source of your payments, offering much better support for scheduling and executing bulk payments compared to traditional bank accounts.

Setting Up Your Account

Once an account is opened for your company, Accounts Payable will create a corresponding new bank account in your accounting software specifically for the Modulr AP account. This integration allows Accounts Payable to maintain constant reconciliation of this account through auto-payment reconciliation, ensuring your financial records are always accurate and up-to-date.

How to Think About Your Modulr AP Account

Your Accounts Payable account can be considered in two main ways:

1. As a Payment Method: If used as a payment method, the account typically maintains a zero balance between payment runs. Funds are added just before a payment run is due. This approach helps build confidence in using Accounts Payable for financial transactions.

2. As an Operating or Trading Account: For those with sufficient cash flow, maintaining an operating balance in the account is definitely beneficial. This eliminates the need to deposit funds for every payment run. Regular, fixed monthly deposits can be set up via a standing order from your bank account, making this the most efficient way to utilise your Accounts Payable account.

Deposits and Withdrawals

You can link your external bank accounts to Accounts Payable to deposit funds into your Modulr AP account easily. This feature not only allows for straightforward transfers but also provides a comprehensive view of all your account balances within Accounts Payable. Additionally, Accounts Payable automatically reconciles any transfers between your AP account and bank accounts in your accounting software, if you have your bank accounts connected.

FX and International Payments

Accounts Payable supports international payments through its currency accounts, enabling you to pay overseas suppliers as easily as local ones. If you have funds in the required currency, they can be transferred into your Accounts Payable wallet using the local bank details provided. For currency conversions, Accounts Payable offers competitive exchange rates, which you can check our live rates here.

Final thoughts...

Accounts Payable accounts offer a flexible and efficient solution for managing company finances, from simplifying supplier and payroll payments to facilitating international transactions. Whether used as a simple payment method or as a comprehensive operating account, the Accounts Payable account integrates seamlessly with your accounting software, helping to streamline your financial operations.