Not only should entrepreneurs be reviewing their interim financial statements regularly says Edmonton bookkeeping. They should be verifying the accuracy of that information regularly as well.
It can be very easy for mistakes to pop-up on the interim financial statements. And with how often an entrepreneur should be reviewing these. In order to make financial decisions.
The more errors these statements have, the harder it is for business owners to make great financial decisions.
One of the first ways that business owners can ensure the accuracy of their interim financial statements. Is by entering their invoices that they receive as they receive them.
This will help ensure that their accounts payable aging summary. Represents all of the money that they owe suppliers at the time they pull that report.
In addition to ensuring that the report reflects all of the money that they owe. Edmonton bookkeeping says that it can help entrepreneurs understand what their expenses are per month.
Or per project. So that they can figure out if they are pricing their products and services accurately. Or if they need to increase prices, or minimize expenses.
Another way that business owners can ensure the accuracy of their accounts payable aging summary. Is by reviewing the entire summary for any round numbers.
While round numbers are not always a mistake. They often indicate that an estimate was entered into the accounting software. Because once taxes get added to the amount that entrepreneurs owe. They are very rarely whole numbers.
Therefore, Edmonton bookkeeping says business owners should review their invoices. To ensure that this was not a mistake. Or that an entrepreneur forgot to update the number when they received the invoice.
Another way to ensure the accounts payable aging summary is accurate. Is by reviewing the report to see if there are any negative numbers.
A negative number typically represents a deposit made. And business owners need to be very careful. That if they have entered a deposit. That when they get the invoice that the entered in.
Business owners often forget to enter the invoice. Because they know it has been paid, and they do not think to enter the invoice into their accounting system. Which is where they will see the deposit, but it will not fall off the report.
By entering that invoice as soon as they receive it. Can help ensure that negative numbers are removed from the reports. Ensuring that the amount owing on this report is accurate.
Especially if the negative number is followed by a positive number for the same supplier. This typically indicates that while a business owner has made a deposit.
They entered the applicable invoice. But did not apply the payment directly to the invoice in their accounting software.
All they have to do to fix this mistake according to Edmonton bookkeeping. Is go back into their accounting software and ensure that they apply that invoice to that deposit amount.
By understanding how to review the accounts payable aging summary for errors. Can help a business owner ensure that this report is up-to-date and accurate. So that it can help them make more informed financial decisions in their business.
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It is not just enough for business owner to be entering in their invoices that they receive on a regular basis says Edmonton bookkeeping. But because errors can be made. Reviewing the reports for mistakes. Is very important as well.
Since entrepreneurs should be pulling this report on a regular basis. And any time they are going to make financial decision. They should be reviewing the report for errors just as regularly.
So that they can ensure there are no mistakes that are causing them to make a decision that might negatively impact their business.
One of the first things that Edmonton bookkeeping recommends entrepreneurs do. When they are scanning this report in order to look for errors. Is looking for any past due amounts over ninety days.
While this does not always indicate an error. Unless a business is in great financial trouble. They should not have any expenses overdue that long.
Therefore, any time and not nor sees this on their report. They should review all of the invoices that they have, in order to verify if this is the case. To find the mistake.
A common mistake that this indicates. Is that for whatever reason, and invoice was entered twice. Perhaps it was entered when the entrepreneur received the paper copy. But then the company also sent an email of the invoice.
And it was entered twice, and even though the entrepreneur made the payment. The payment was only applied to one invoice, weaving one showing as outstanding.
Another reason why a business owner might end up with an invoice showing ninety days due by mistake. Is if there was a mistake made. When they entered in the amount that the invoice was for.
Data entry mistakes happen frequently. And if the entrepreneur entered as much higher amount than the invoice was for. This could end up remaining on the accounts payable aging summary.
Even if the entrepreneur paid the actual invoice amount that they owed. This could still show as owing for the remaining amount that the business owner accidentally entered.
Another mistake that entrepreneurs often make on their accounts payable aging summary. Is putting corporate expenses into this account.
This often happens when the business owner is new, and is setting up their accounting for the first time says Edmonton bookkeeping.
While corporate costs might seem like they belong in this account. They also should be put in a separate account. So that an entrepreneur can pull a report to show all of their business expenses. And then pull report to show all of their corporate expenses.
Corporate expenses can include corporate taxes, provincial and federal taxes including GST. And even payroll taxes, and shareholder loans.
By putting all the expenses where they belong in their own account. And ensuring that accounts payable aging summary is only for expenses of the business. Can ensure the accuracy of this report.
Especially when an entrepreneur is figuring out if their pricing is accurate. Or if they are figuring out how much money they are making on a specific project. Having the corporate expenses out of this account will help them reach an accurate conclusion.