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new small businesses and entrepreneurs soon discover that the trade process can become a monster. If it is not handled properly, unpaid bills pile up and get paid late, making producers angry and potentially damaging companies’ creditworthiness.
When a consistent method is developed, the accounts payable process can go smoothly. If you are in business by yourself and can not afford to hire outside help, here are ten tips to help establish a consistent accounts payable process
1. Purchase accounting software with Accounts Payable modules. In business and computer day world, some may wonder why this is even a proposal on a list like this. Surprisingly, Internet research indicates that up to half of micro enterprises (defined as under ten employees) do not use accounting software, used Instead spreadsheets or even paper ledgers.
Advantages of using accounting software with accounts payable module are enormous and far greater cost and learn. When used correctly and consistently, the software will serve several important functions: a reminder of when bills are due; generator payments; and recorded payments in the check register. The time savings alone to do these operations manually warrant purchase accounting.
2. utilize vendor automatic debit or automatic charging feature, if available. Utility companies and other types of businesses that have recurring payments, often offer automatic debit or automated service fee. When used, the amount due is automatically deducted from the company checking account, or charged on a company credit card, on the date shown on the invoice. Often, the paper bill is still sent, but sometimes the seller insists mail accounts when this service is active. Either account can be viewed before the amount is deducted or charged. When used in connection with the accounting software, the amount can be dated by the investigation file or credit record. If a company has a good and consistent cash flow, this method saves time and money by avoiding payment of the bill process altogether.
3. utilize internal “bill pay” feature of the software, if available. Quick Books, for example, offers a “Bill Pay” feature that is very inexpensive and easy to use. Arriving bills paid electronically in accordance with the authorization of the software user. Bill payment takes the amount authorized by the designated bank account, then either issues a paper check to the seller, or electronically transfer money to the account of the seller. Low monthly fee is not much more than the cost of postage and paper check printing.
4. Enter unpaid bills timely. not delay entering unpaid invoices in accounting software. Waiting too long to strike may lead to late payments, finance charges, and the possibility of damage to the business credit score.
5. Enter unpaid bills right. It is very important to examine the bill and enter the correct vendor name, bill due date and account. Entering wrong due date will result in the payment arrive earlier or later than necessary. After entering them, brand them as “take” or “Sent” with a stamp in red ink. Be sure to write the account of the date they were written.
6. Plan unpaid bills. If there are many accounts, arranged in alphabetical file system to make them easy to find. Small amounts of bills can be put in a single file.
7. If money is tight, determine cash flow before paying bills. Simple cash flow reports are easy to create in Excel. Start with the actual amount of money to pay bills. Amounts in checking accounts, savings accounts and credit lines. Reducing bills that must be paid immediately. If it is not convenient pull of money left over, reducing the amount of bills to pay.
8. If money is tight, communication with the suppliers who must pay late. No vendor strengthens paid late, but they appreciate the open communication. If you must pay the seller late, let them know and let them know the specific date you intend to pay them. Then make every effort to pay them for that day.
9. Pay your bills on the same timetable Establish regular schedules to pay the bills -. Every week is a good and common choice
10 .. After they are paid, stamp them correctly, then check them. Buy rubber “paid” stamp, and use it every bill that has been paid. Write the check number (or payment), the date of payment and the amount paid for the bill. File them by the way they appear on the tax return. In other words, our Utilities, register office, register Travel and entertainment together, etc. This makes them easy to find any review.
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