While entrepreneurs face many challenges when they open up their business for the first time according to Edmonton bookkeeping. There are three most common challenges that cause business owners to fail.
According to industry Canada, half of all Canadian entrepreneurs end up failing. 23% fail because they cannot find enough staff, or keep the staff that they have. 42% are unable to find enough customers to sell their products and services to.
And 29% of all entrepreneurs that fail in business. Fail because they run out of money in their business. The more businesses that learn how to read their interim financial statements. Can often overcome this obstacle.
Because understanding their finances better. Will help them not only spend their money more responsibly in their business. But they can do things like understand their pricing, minimizing their expenses. And only spend money that they have their business to spend.
One of the first things that business owners need to understand, is that there accounts payable aging summary. Is for all business expenses. From their direct expenses, for materials and supplies used to ache the products and services that they sell.
To all of the overhead expenses that they have in their business, from rent and utility bills, to phone and Internet, and office supplies. Any corporate expenses should not be entered into this report. Because they all have their own accounts.
By ensuring that this report is only for business expenses. Can help ensure that when business owners pull this report to review it. It will represent all of the expenses in their business, and not the taxes that they owe for example.
Once business owners understand what invoices are reflected in this summary. The next thing that is very important according to Edmonton bookkeeping. Is that they should enter their invoices as soon as they are received.
Not only will this help ensure that the expenses get booked in the time periods that they occurred in. So that business owners will be able to know how much money they are making per project or per time period.
But also, so that any time they pull their accounts payable aging summary. They will know how much money they owe their suppliers at any given time.
Since they should be looking at this report prior to making any financial decisions. Ensuring that whenever they look at the report it will be accurate. Is incredibly important.
One thing that business owners should be looking for when they first scan their accounts payable aging summary. Our for round numbers. While round numbers do not always indicate that there is a mistake.
However, invoices typically have GST added to them. So having a completely round number is quite rare. Edmonton bookkeeping says having around number typically means that an estimate was entered.
And while estimates can help entrepreneurs understand approximately how much they are eventually going to owe. They should verify that any estimates are changed as soon as the invoice is received. So that the amount of money in the accounts payable aging summary is accurate.
It is very important that entrepreneurs learn how to read and review their accounts payable aging summary. So that they can understand the amount of money that they owe their suppliers. So that they can spend the money that they do have wisely.
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Learning how to read an AP summary is very helpful for entrepreneurs who want to keep track of all of the money that they owe their suppliers says Edmonton bookkeeping.
Because if business owners do not have this report, or if it is not accurate and up-to-date. They may think that they do not owe as much money as they do. Which can cause them to spend more money than they have.
It is also an important tool that can help entrepreneurs understand how much money they are making on a certain project. Or within a certain timeframe. That is important to help understand if they need to minimize those expenses.
Or if they need to increase their prices, so that they are either making more profit per transaction. Or to ensure that they actually are making a profit on each transaction.
And while many entrepreneurs think that as they enter each invoice that they receive. Is going to be enough to ensure the accuracy of their accounts payable aging summary. Edmonton bookkeeping says they also need to review it for errors as well.
The reason why business owners should be reviewing the report for errors. Is because mistakes can be made, either with entering the total amounts. Or by entering invoices more than once, or not at all.
Learning how to scan the AP summary for errors. Is just as important as entering the invoices as they arrive.
One of the first things that business owners should look for on their accounts payable aging summary. Is amounts that are over ninety days due.
Unless the business is in a lot of financial trouble. Should not be many expenses if any over ninety days due. Therefore, if they see any, that is an indication that they should verify the accuracy of the number.
One common mistake that happens that would cause an invoice to be ninety days overdue incorrectly. Is if not nor has entered the invoice twice. Or they entered an amount much larger than the amount actually on the invoice.
When they entered an invoice twice, when they pay one, the one will drop off the AP summary. While the other one, will not get dropped off the summary.
And unless the business owner deletes the incorrect entry. It will stay on the report. And look like an entrepreneur owes more money than they do says Edmonton bookkeeping.
And if an entrepreneur has entered a much higher number than they should on the invoice. When they do pay that invoice. It will bring the amount that they owe down. But it will also show that there is an amount left owing.
By learning how to scan their accounts payable aging summary for errors. Can help ensure that business owners are minimizing those errors. Protecting the integrity of the information on this report.