It is not just enough for entrepreneurs to learn how to read their accounts payable aging summary says Edmonton bookkeeping. But they also need to be able to review it for errors. In order to ensure its accurate.
This way, when they use the statements in order to make business decisions. They will be more likely to make better business decisions. Because of the accuracy of the accounts payable aging summary.
The first thing that entrepreneurs need to learn, is how their accounts payable aging summary is laid out. And what information is on the report.
On the far left-hand side of the page, is owners will see a list of all of their suppliers that they owe money to. On the far right hand side of the page. Business owners will see the total amount of money that they owe their suppliers.
In between the two columns, will list all of the amounts that entrepreneurs are those suppliers, categorized by how old the invoice is.
Edmonton bookkeeping says business owners should pay special attention to the category that shows ninety days past due for a couple of reasons.
The first reason, is if an entrepreneur has in fact missed paying that invoice. They should pay it as soon as possible. To ensure that they continue having a great relationship with their supplier.
But unless business owners are in financial trouble, this usually is not the reason why they will have an amount in this category. It is more often an indication of the mistake.
The mistake is often because when an entrepreneur receives an electronic invoice as well as a paper invoice. And they accidentally enter both into their accounting software.
Then, as they enter the payment. It is applied against one invoice. The other one looks like it has an amount left owing on it.
Another reason why this might indicate an error. Is that a business owner may have accidentally entered the wrong invoice amount. When manually entering the total into their accounting software.
Then, as they enter their payment. They do not realize that it shows an amount left owing. Which continues to hang around the accounts payable aging summary creating problems.
This is why business owners should question any amounts that are left owing for ninety days or more. Because these often indicate mistakes that can be fixed.
Another thing that business owners should be aware of, is if they see a negative number on their accounts payable aging summary. If negative numbers appear legitimately on these reports. Edmonton bookkeeping says they indicate that the deposit has been made.
If an entrepreneur has not paid deposit, and can verify that. This typically means that the entrepreneur has missed entering the invoice. However has not missed entering the payment. Causing it to look like a deposit has been made.
Therefore, if business owners can look at a negative number and know that they have not paid deposit. They can then look for the error that can be fixed.
It is very important that entrepreneurs learn quickly in their business. How to read and correct their accounts payable aging summary. And by looking for indications of mistakes weekly.
Can help entrepreneurs fix those mistakes just as quickly. And get back to making the best business decision that they can.
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If entrepreneurs are going to make the best financial decisions possible says Edmonton bookkeeping. They learn how to review their accounts payable summary for mistakes. As well as understand how to use that information in their business.
One of the most common questions that Edmonton bookkeeping has. When entrepreneurs are learning how to understand their accounts payable aging summary is.
If an entrepreneurs having a cash crunch. How should they use the accounts payable aging summary to help them figure out what to do?
This is a difficult spot to be in says Edmonton bookkeeping. However, there could be a strategy that business owners can follow. To help them get out of this cash crunch, without upsetting their suppliers.
One of the first things that is recommended that entrepreneurs do. Is look at their key suppliers. That is to say, the suppliers that without them. Business owners would have a difficult time operating their business.
And pay those suppliers first. To avoid upsetting them, and potentially not being able to get the supplies they need to function in business.
The second thing that business owners should do, is look at their accounts payable aging summary, in order to see how many very small amounts they owe. And pay all of those amounts next.
The reason why this is recommended. Is that entrepreneurs can avoid having lots of collection calls for very little amounts. This can be a large waste of an entrepreneurs time.
That they can be spending on generating income for their business. In order to fix the cash crunch situation that they are in.
And finally, the next thing that they should do is create a payment plan for all of their other suppliers. So that they do not end up with any of those suppliers taking them to collections.
And by paying each of those suppliers a small amount. Can show them that an entrepreneurs making an honest effort to pay them. And can cause them to be a bit more patient and waiting for the rest of the money that they are owed.
While no business owner wants to be a cash crunch situation. If entrepreneurs find themselves here. Learning how to read and review their accounts payable aging summary.
And what their next steps should be. Can help them continue operating their business, and create a plan. That will help them pay the suppliers that they have. And focus on generating more income in their business. So that they can make more money to pay those suppliers.
Learning how to read and review their accounts payable aging summary is something that business owners should do right away in their business. And when they do says Edmonton bookkeeping.
They can start learning how to correct mistakes that might appear on them. So that they would be better able to make these decisions.
That can help them significantly not only avoid problems in their business. But help them grow their business as well.