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It is extremely important that entrepreneurs keep their accounts payable information well organized says Edmonton bookkeeping. There are several reasons why, including helping an entrepreneur stay organized and what they have to pay so that they are paying their bills on time. And also, ensuring that their balance sheet remains accurate at all times so that entrepreneurs can pull that report any time they need to make a financial decision.

How entrepreneurs can stay organized, is by understanding what and accounts payable is, and how to organize the process in their own bookkeeping system. Edmonton bookkeeping says any time an entrepreneur purchases something for their business and does not pay immediately, automatically turns that amount that they owe into accounts payable. This will show up in the liability section of the entrepreneur’s balance sheet. Even though it is considered a short-term loan, it is not going to appear with the other loans of the business such as a bank loan, or a vehicle purchase loan.

In order for an entrepreneur to keep organized with all of their accounts payable to verify the accuracy of the amount that they owe, they will need to keep organized with three documents: a purchase order, a receiving report and a vendors invoice. At different stages of making their purchase, a business owner should expect to get these three things. They need to accept them and organize them together so that when they are verifying the accuracy of all of the amount that they owe to vendors, they know that they have the documentation to support it.

Edmonton bookkeeping says that a purchase order is going to be something that is prepared by the seller to communicate to the purchaser what is being purchased. Purchase orders usually have a reference number, the date it was prepared, company name, the vendor name, a contact name and phone number as well as the description of the item and price. Some industries might necessitate additional information such as the date it needs to be sent to them, shipping method and payment instructions.

A receiving report is a document that will accompany the product that is sent out. It should have the same information of the purchase order, but it will include a complete list of everything that was shipped. This is extremely important for a couple of reasons says Edmonton bookkeeping. If a partial order is shipped, a business owner needs to compare the receiving report to the purchase order and ensure that they get all parts of their purchase. The second reason is important, is if more than one person is doing the buying and receiving.

The vendor’s invoice is the final piece, that is going to help an entrepreneur have an amount of money that they owe the company. This is what the entrepreneur will use to put into their accounting software like QuickBooks. Entrepreneurs can consider things like utility bills, cell phone bills and Internet bills as part of their accounts payable as well.

When entrepreneurs understand how to organize and track their accounts payable, they can stay organized so that they can pay their bills on time, and also understand how much liability they have in their business, which is important to know if they are going to make any financial decisions.

Edmonton Bookkeeping | Keeping Accounts Payable Organized

It is important that entrepreneurs understand what accounts payable is, and how it is tracked in their system says Edmonton bookkeeper. Into it, who is the company that makes QuickBooks, surveyed several small business owners on their basic business financial literacy? They ask questions such as how can an entrepreneur improve their cash flow, what is the role of the balance sheet and what our accruals. Out of all of the respondents, 82% score less than 70% on this quiz. This proves that entrepreneurs often struggle with understanding business finances, so helping them understand accounts payable can be significant.

The first thing that an entrepreneur should understand is what is accounts payable. Edmonton bookkeeping says that all accounts payables are a liability, detailing the amount that is owed to a creditor for any purchase. If an entrepreneur makes a purchase and does not pay right away, this is entered as accounts payable. Examples of various things that can be accounts payable include office supply order from Staples or utility bills like electricity and heat.

When an entrepreneur makes a purchase and does not pay immediately, they end up entering into a creditor/debtor relationship with the seller until the entrepreneur pays. However, Edmonton bookkeeping says that business owners need to be very clear that even though it is considered a short-term loan, it should not be included in the loan section of the business’s finances. Accounts payable are always considered short-term loans, and should always be separate from things like bank or vehicle loans.

When an entrepreneur pays their account payable section, as they pay, the cash that they have available on their balance sheet also decreases, but the amount that the entrepreneur owes also decreases. It is important for business owners to understand how that is tracked through their balance sheet so that they can always ensure that the amount that they have paid their accounts payable is reflected accurately in the cash that they have available. By ensuring that the cash that they have available goes down the same amount, they can ensure that there paying accurately, and keeping track of it properly.

The way and accounts payable is tracked and they business finances say Edmonton bookkeeping, is on the balance sheet. Very similar to and Accounts Receivable, which appears in the asset section of the balance sheet, the accounts payable appears as a liability on the balance sheet. It is extremely important that an entrepreneur stay is very organized with their accounts payable so that they can ensure that they are paying their vendors completely, on time, and avoiding double pay. This, in turn, will help the balance sheet of the business stay very accurate, so that any time an entrepreneur needs to make a decision in their business, they can pull the balance sheet and understand where the finances are in their business.