Studies have shown that while 50% of all Canadian entrepreneurs fail according to Edmonton bookkeeping. Only 11% of businesses ever seek help. Which means even if they are struggling, they may not get the help they need to overcome problems.
Learning how to operate a business can be very difficult. Especially since many business owners have never done this before starting their own business. And may not know everything that they need to do in their own business.
This is by Edmonton bookkeeping recommends that entrepreneurs learn how to read their interim financial statements. So that they can make better and more informed financial decisions in their business.
One of the most important interim financial statements that they can learn how to read. Is the accounts payable aging summary. Which shows an entrepreneur how much money they owe their suppliers in their business.
And while it seems like most business owners would not struggle with entering their expenses. However, because business owners are often very short on time. They often do not end up entering those expenses, until they and or the payment as well.
And while this might end up looking like they have extremely good accounts payable aging summary. Because they do not have a lot of outstanding bills. This is not because they are good at paying the bills necessarily. But because they are not all entered into the accounting software.
Therefore, by entering the expenses upon receipt of the invoice. Can ensure the accuracy of this report. So that business owners will know how much money they have to pay all of these suppliers in their business.
But not only that, but by entering the invoices when they are received. Will help ensure that it is entered in the correct time period. So that they understand how much money their making in that timeframe, and per project.
Once an entrepreneur is entering all of the information in correctly. The next thing that they can do, is learn how to review the report for accuracy.
By reviewing the report, and fixing any mistakes. Can keep the report more accurate. So that when they do use the report to make financial decisions. Those decisions will be the best ones that they can make.
One of the first mistakes that they can look for according to Edmonton bookkeeping. Our any invoices that are over ninety days due.
The reason why these are often errors. Is because unless an entrepreneur is in serious financial trouble. They should not have expenses that overdue.
What the typical error is in this instance, is that a business owner may have entered the invoice twice. And although the invoice has been paid, that takes one invoice out of the report. But the other, and correctly entered invoice remains in the system. Causing problems on the summary.
Or, another reason why there would be an error due to a ninety days overdue invoice. Is because an entrepreneur entered it incorrectly. Often entered a higher total on the invoice. Then what the original invoice was for. And even though they have paid the invoice, is showing an amount owing still.
Learning how to read the accounts payable aging summary, and fix mistakes. Can help ensure that business owners are able to use that summary to help them make more informed financial decisions in their business.
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Not only is it important for entrepreneurs to be reviewing their interim financial statements says Edmonton bookkeeping. But they should be able to review them, and correct any mistakes quickly.
Because of how important these statements are. And how often an entrepreneur should be using them make informed financial decisions. The more accurate these reports are. The better information they will hold.
With the accounts payable aging summary. One of the first things that business owners need to learn about this report. Is that no corporate costs should show up in this summary. This includes any taxes both federal and provincial. As well as things like shareholders account should not show up your either.
All of these expenses should have their own account. So that a business owner will be able to pull those reports and see all of the various taxes that they owe.
But also, so that when they pull their accounts payable aging summary. Is going to show all of the amounts that they owe their suppliers only.
So that they will be able to understand if they are pricing their products accurately. As well as if they need to minimize expenses in their business.
Once they understand that the accounts payable aging summary is for suppliers only. The next thing that Edmonton bookkeeping recommends they do. Is learn how to review the summary and look for errors.
One thing to look for that often indicates an air. Our negative numbers on the report. A negative number will represent a deposit made to a supplier. Without an invoice being given.
And while it is common for business owners to put deposits on certain invoices. Any time a business owner sees a negative number, they should verify its accuracy.
Especially if they continue to see a negative number, month after month. They typical error that happens here. Is that a business owner did not enter the invoice. Which would have cancelled that negative number out.
Sometimes, business owners do not think to put in the invoice and their accounting program says Edmonton bookkeeping. Because they know that they have already paid for it, and they do not think it is important to enter the invoice.
However, when a business owner does not enter an invoice even if they have prepaid it. It will end up making the entire accounts payable aging summary and accurate.
In addition to that, business owners should look to see if there is a negative number that has a positive number for the exact same amount for the same supplier.
This typically means that while the entrepreneur entered the invoice for that deposit. It has not been applied correctly. And business owners can simply go into their accounting software to apply the payment correctly against the correct invoice.
By understanding how to ensure the accuracy of the accounts payable aging summary. And how to fix mistakes. Can help business owners understand their expenses. So that they know how much money they owe their suppliers on a consistent basis.