Why does it matter?You want to keep good terms with suppliers – if you’re delaying paying them, they may stop your credit or delay deliveries. It is also essential to think about cash flow. Your bank balance could come up short if you pay everyone at once. And that would take you with little cash to cover other expenses, unanticipated costs, or to fund business growth.
1: Purchase order
Create and send purchase order to supplier.
2: The Supplier Confirmation
After negotiations and confirmation from supplier the order is placed.
3: Received goods/services
Goods or services received from supplier along with bills.
4: Date Entry
After verification, bills are entered in accounting system manually or automatically and sent for approval to relevant person.
5: Payment schedule
After approval of Bills, payment schedule is setup for approval and sent to relevant person before due date.
6: Payment sent
Payment sent to supplier according to due date. A confirmation email with payment receipt also sent to supplier.
The payment will be applied to the bills and matched with banking transaction in accounting system.
There are several tasks involved in the accounts payable, including the following:
- Regularly reconcile the accounts payable account to confirm that the account balance equals the actual amounts payable to suppliers.
- Send 1099 forms to vendors at the end of the calendar year if total payments to each vendor exceed a threshold limit.
- Contact suppliers to confirm that they have cashed all checks. Otherwise, the uncashed checks may have to be sent to a state government as unclaimed property.
Accounts Payable Bookkeeping completed quickly, accurately, and efficiently.
Your accounting records play a vital role in your decision-making process, hence the need for reliable AP bookkeeping. Knowing where your money goes can determine your budget allocations and stabilize your cash flow- paramount to any business, new or established.
More ways to stay on top of accounts payable
- Go paperless
- Use purchase orders
- Create accounts payable aging schedule
- Put them into your calendar
- Focus on accounts payable turnover ratio