Business owners need to understand that the accuracy of their accounts payable aging summary says Edmonton bookkeeping. Can help them make more informed financial decisions.
While many business owners, especially when they are new. Think that they are going to be able to pull up their bank account, in order to see how much money they have to work within their business.
Unfortunately, that creates several problems. Because not only does that only show the exact amount of money that the business owner has in their bank account at that moment.
Not taking into consideration things such as how many checks they have written, that are waiting to clear. Or what electronic fund transfers they have arranged.
But it also does not allow a business owner to take into consideration how much money they owe their suppliers.
Which can very easily cause them to spend money that they do not have, instead of spending it on what they should be spending it on. Which is paying their bills, and payroll.
This is why it is a much better idea for entrepreneurs to review their interim financial statements. In order to make those same financial decisions.
But by reviewing these reports. The decisions they make will be much more accurate. And can help them significantly in their business.
However, because these interim financial statements are not being prepared by an accountant. Can have errors in them. Which good affect an entrepreneur’s ability to make the best financial decision.
This is why it is very important that they learn how to review these financial statements for errors. And fix those errors before they go on to make decisions with that information.
When it comes to their accounts payable aging summary. Edmonton bookkeeping suggests that entrepreneurs look at the ninety days overdue column.
Unless a business owner is having a lot of financial trouble. There should not be any invoices that are overdue by that amount.
Therefore, any time an entrepreneur sees an amount in this category. It should trigger them to look for an error that is causing that amount to be incorrect.
What typically causes an invoice to appear in the ninety days overdue column. Is if an entrepreneur has accidentally entered an invoice twice.
This is often when a business owner receives a paper copy of an invoice. And then receives an electronic copy a day or two later. If an entrepreneur is not paying enough attention.
They will accidentally enter that invoice twice. And when they make that payment, the payment goes onto one invoice. Leaving the other two remain in the accounts payable aging summary as a mistake. Also impacting the accuracy of the information.
Another reason why mistake might cause an invoice to appear ninety days overdue. Is if an entrepreneur has made a data entry error.
And as they were typing in the amount on the invoice. They pushed a much higher number than was actually on the invoice says Edmonton bookkeeping.
The results, is when an entrepreneur enters the payment. They will enter the correct payment, but there will be an amount left owing. That continues to hang around is an error on the accounts payable aging summary.
By being able to see where there are common errors. And learn how to troubleshoot them. Business owners can ensure that their accounts payable aging summary is accurate. And that can help them make more informed financial decisions.
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Although there are very many things that business owners need to learn when they first start their business says Edmonton bookkeeping. Some of the first things that they should learn. How to read their interim financial statements. As well as troubleshoot them for errors.
This will allow business owners to understand on a deeper level their business finances. Help them make more informed decisions.
Not just how much money they can spend, and when they can spend that money. Whether it is on payroll, bills, or purchasing an asset.
But understanding their accounts payable aging summary. Can help business owners understand how much money they are making per project, and within a certain timeframe.
That will help them analyse their pricing structure, to verify that they are pricing their products and services in a way that they can earn money. As well as if they need to minimize expenses. Or increase their prices.
However, learning how to troubleshoot errors can be difficult if business owners do not know what to look for. Which is why Edmonton bookkeeping says by knowing some of the key signs. That typically indicate an error.
Can help entrepreneurs quickly review their report, catch mistakes and fix them. So that they can get back to making the financial decision they have at hand.
One of the first things that they recommend entrepreneurs do. Is scan the report, looking for negative numbers.
Negative numbers typically indicate that an entrepreneur has paid a deposit. And while it is definitely plausible that business owners have paid deposits from time to time with their suppliers.
Anytime a business owner sees a negative number, they should in fact verify that it is a deposit that they have paid. And not mistake that they have made.
One of the most common reasons why mistake causes a negative number. Is when an entrepreneur has entered a payment. But they have neglected to enter the invoice.
However, Edmonton bookkeeping says that if business owners notice that there is so negative number with a corresponding positive number in the exact same amount. And for the exact same supplier. That is also an error.
This error typically means that while an entrepreneur has entered the invoice correctly, and entered the payment correctly.
They did not book the payment to that invoice directly. Which causes both of those amounts to be in the accounting software. While but does not cancel each other out until they specify that in the accounting software.
When business owners know what to look for when doing their accounts payable aging summary. In order to correct mistakes. They will be better able to make decisions in their business that are financial in nature.