Accounts Payable Management

Accounts Payable ManagementBookkeepers can manage payment of your bills

All businesses need to ensure that they pay their bills on time if they want to maintain good relations with their suppliers. Nobody likes to be paid late. Suppliers have different credit terms ranging from cash on delivery to 30 days. From a bookkeeper's perspective, it is important to maintain the profile of each supplier and update the payment terms. Accounting software such as MYOB and Quickbooks allow for suppliers' payment terms to be entered into the Card profile.

The importance of maintaining an accurate database of suppliers' terms cannot be underestimated. Major suppliers now offer early payment discounts which customers should take advantage of. It is important when entering the bill into the accounting software to record the date of the bill and when it is due. Discounts of up to 3% are availibale for early payment.

A bookkeeper should process a purchase order prior to the actual purchase and send the purchase order number to the supplier. When the goods are received the purchase order can be converted to a final bill and the goods received into inventory. This allows for proper management of accounts payable.

Payment of bills can be processed by cheque or electronically. If the payment is made by cheque, the cheque number should be recorded in the accounting software for audit purposes. An electronic payment will be made by production of an ABA file which can be uploaded to the online banking account. This is a manual upload process. 

The reporting of aged payables is an important aspect of good creditor management. An aged payable report shows your bills in time periods. Those bills which are not due are called current. Another column on the aged payables report shows bills which are over 30 days old, over 60 days old and over 90 days old. Payment of the oldest bills should be the first priority.