Helping entrepreneurs stay organized financially is extremely important says Edmonton bookkeeping. One of the most important reasons why, is because many entrepreneurs struggle with understanding their business finances. This was proven in a study done by end of its, the makers of QuickBooks who tested the basic financial literacy of entrepreneurs. They were asked questions such as what is the role of the balance sheet, accruals, and how to improve cash flow for example. 82% of the small businesses that responded to the quiz ended up scoring less than 70%. One way that entrepreneurs can help stay organized financially, is by understanding what accounts payable is in their business, and why it is important to keep track of it.
The first thing that can help entrepreneurs ensure their accounts payable as accurate is understanding what it is. Edmonton bookkeeping says that this is a liability for the amount that a business owner owes a vendor for goods or services that they have purchased. Any time an entrepreneur makes a purchase and does not pay immediately, they end up having accounts payable in their business.
Since the accounts payable is the amount that they owe, business owners should consider it for all intents and purposes a short term debt. They should understand how these short-term bets appear on their financial statements. When they look at the balance sheet of their business, entrepreneurs should see that the top section is for assets, and a list of all assets in their business, the second section is liabilities, will have a list of all the liabilities of the business. The bottom section is all of the equity that is in the business. Any time an entrepreneur makes a financial decision in their business, they should look at their balance sheet in order to determine the financial health of their business. By subtracting the liabilities from the assets, can give the entrepreneur a great idea of how the business is doing.
Any time an entrepreneur enters in an invoice for an order that they have made into their accounting software, the accounts payable is going to increase. As they make payments, the liability will decrease, but so will the cash in the asset section of their balance sheet as well. It is very important that an entrepreneur verifies that the cash section decreases for the same amount that they have made payments for. By doing this, entrepreneurs can ensure that they are tracking payments accurately, maintaining the integrity of their balance sheet.
By understanding what accounts payable are, how they are tracked in their accounting software and on their financial statements of the business, Edmonton bookkeeping says that business owners can stay organized, and ensure that they are making payments accurately and on time, so that their balance sheet remains an accurate reflection of the finances of their business. Since entrepreneurs need to pull a balance sheet every time they are going to make a financial decision, understanding how the accounts payable effects this is extremely important.
Edmonton Bookkeeping | What Are The Accounts Payable Of The Business
It is extremely necessary for entrepreneurs to track the accounts payable of their business says Edmonton bookkeeping. By developing an organized system of keeping track of their invoices, entrepreneurs can ensure that they are creating a clear view of all the payables in their business, that can help entrepreneurs pay invoices accurately, on time and avoid either double-paying or missing paying invoices. Having a great system in place can help entrepreneurs view their finances in a stress-free way.
An accounting system that they can develop that can help entrepreneurs stay organized, regardless of how many employees they have whether it is just the entrepreneur themselves, or they have multiple employees doing many different things in their business. By developing a system utilizing a purchase order, receiving reports and vendors invoice in their business can help ensure the organization of their accounts payable.
The purchase order that an entrepreneur receives is prepared by the vendor and is going to have a list of everything that an entrepreneur is ordering from that vendor. The purchase order among other things should contain a list of the items they have ordered, the quantity that they are ordering, and the unit price. It is extremely important that an entrepreneur keeps this purchase order throughout this process says Edmonton Bookkeeping.
When an entrepreneur starts receiving the products from the vendor that they were ordered from, and ten bookkeeping says that they should also be ensuring that there is a receiving report in the boxes of products. This is the report that documents what products are being included in the shipment. The information should be comparable to the purchase order. Business owners should double-check the receiving report to the purchase order, in order to ensure everything that was ordered was received. If not, the business owner can call the company and have the situation resolved. Also, companies may ship orders out is incomplete. Business owners need to be mindful that there keeping track of partial orders, because they will end up with multiple receiving reports. Once they received all of the products that they have ordered, they can verify the accuracy by comparing the receiving report to the purchase order.
Edmonton bookkeeping says the final report that an entrepreneur will get once the product has been received, is the invoice. This will have the final amount that the entrepreneur owes the vendor, including a list of all of the products that were purchased, and the price for each. Not only should entrepreneurs verify all of the products on the invoice match what has been received, but the price that is indicated on the invoice is what was indicated on the purchase order. By doing this important triple check system, can help entrepreneurs ensure that the amount that they are entering into their accounting software is accounts payable is as accurate as possible. By being confident in what they are entering into QuickBooks, can help entrepreneurs confidently make payments accurately and on time.