Helping an entrepreneur understand their accounts payable, can go a long way in helping them understand the overall financial health of their business says Edmonton bookkeeping. Many entrepreneurs lack a complete understanding of their business finances, helping them understand the accounts payable and how it relates to their balance sheet, can go a long way in helping entrepreneurs make informed financial decisions early on in their business. When business owners are learning this, they often have many questions relating to what Accounts Payable is, and how that affects their business.
The first question that entrepreneurs have quite simply is: what is Accounts Payable? Edmonton bookkeeping says that Accounts Payable refers to the amount of money that an entrepreneur owes a vendor for any goods or services that they purchase. Simply put, it is a liability in their business because it is the amount of money that they owe.
The next question that entrepreneurs often have is how can a good bookkeeper help with Accounts Payable? Entrepreneurs should understand that by utilizing a great Edmonton bookkeeping company, that can help them stay on top of their accounts payable by having a clear understanding at all times of all of the payables that they have in their business. But that will do for entrepreneurs is help ensure that they are paying all of their invoices on time, and avoid making mistakes like paying invoices twice, or completely missing paying for an invoice at all. A great bookkeeper can make the payments of the business far less stressful for entrepreneurs.
The third question that entrepreneurs often have about their accounts payable is where the record them. When an entrepreneur receives an invoice in their business, when they enter it into their accounting software, it will show up on their balance sheet. The balance sheet has three sections to it, the first top of the page will show a list of all of the assets that an entrepreneur has, and in order of liquidity meaning cash is at the very top. The second section is a list of all of the liabilities in the business and will be where the accounts payable of entrepreneurs business is listed. It is considered a short-term debt that is going to stay in that section for the life of the debt. The only time it moves is when it is paid and that amounts decreases from the balance sheet entirely. Business owners should understand that this should be considered completely different from long-term loans in their business such as loans they receive the make asset purchases for vehicles, or if they get a loan from a financial institution.
By learning how to understand the accounts payable in their business, entrepreneurs can start to gain an understanding of what Accounts Payable is, and how to use the balance sheet it in their business to make informed financial decisions. By learning how to do this early on in their business, can help entrepreneurs make great decisions early on in their business, that can have the avoiding making common mistakes that other entrepreneurs make.
Edmonton Bookkeeping | Commonly Asked Questions About Accounts Payable
Often, when it comes to the business finances, Edmonton bookkeeping says entrepreneurs is a very steep learning curve. They have many questions when it comes to the accounts payable of their business, and when they are able to learn very quickly, they are able to make better financial decisions earlier on in their business, that can help them not only avoid making poor financial decisions but can help them make informed financial decisions that can help them grow their business.
In order to learn how to understand the accounts payable of their business, many entrepreneurs have several questions. One of the first questions is what documents does an entrepreneur need to know in order to ensure that their accounts payable is legitimate and accurate? When entrepreneurs are able to keep track of the purchases that they make, not just by invoice, it can help them significantly understand their accounts payable. Edmonton bookkeeping says that the three reports that are needed are the purchase orders, the receiving reports, and the invoices. They say that a well-run account payable process will include the timely processing of accurate and legitimate vendor invoices. When an entrepreneur can keep track of these things, they can ensure that their accounts payable is easily controlled.
The next question that entrepreneurs often have is what is a purchase order? Edmonton bookkeeping says that this is prepared by the vendor to communicate to the purchaser what is being ordered. A purchase order might include a wide variety of items, but they should all include what items are being purchased, the quantity and the unit number.
The next question is what is a receiving report? The receiving report will accompany all of the products that have been shipped from the vendor to include a list of everything that is included. An entrepreneur needs to first verify that all of the products that were received were included in the receiving reports and that everything on the receiving report was included in the purchase order. This is to ensure that they receive everything that they ordered, and did not receive anything additional. A business may have shipped a partial order, which means one purchase order may arrive in several pieces and require several receiving reports.
Another question entrepreneurs have is what is an invoice? This is the third piece of the system that business owners can use in order to verify the accuracy of their accounts payable. The invoice will come after an entrepreneur has received all of the products that they quartered, and will have a list of all of those products, and the amount of money that an entrepreneur owes. It is important that a business owner compares the list of products to what they received on the receiving report, and that the amount of money is what they were expecting from their purchase order. If not all of the amounts match up, entrepreneurs should contact their vendor in order to fix the invoice so that they can enter it correctly. By doing this efficiently and timely, can help an entrepreneur ensure the accuracy of their accounts payable.