If you are receiving more than two bills per day, the SBA advises automating your accounts payable tracking, rather than manually recording each expense. Using this outline will make recording and managing payments a more seamless process, regardless of its size. The SBA recommends setting up your accounts payable spreadsheet to include the following items: From there, you will collect and organize all of your receipts, credit card expenses and incoming bills. To set up your accounts payable, consider using an accounting software, like QuickBooks or FreshBooks. Like your accounts receivable, which is the money owed to your business by clients or customers, accounts payable is an important part of your balance sheet and must be regularly reviewed. Until you pay off that purchase on your card, the purchase will be recorded in your accounts payable.Īccounts payable exists to ensure you aren’t past due on any payments and allows you to consider your liabilities versus your assets to accurately project cash flow. These expenses are not immediately paid and are considered “liabilities” in your accounting books.įor example, let’s say your business needs equipment and you charge that equipment on a company credit card. Your accounts payable includes all outstanding bills you owe for goods purchased and services received, excluding payroll costs. Below, we’ve defined and outlined the process of setting up and maintaining your business’s accounts payable. Properly recording and tracking your accounts payable also ensures you are up to date on your debts and not missing any important payment deadlines. If you do not anticipate your current debts by tracking accounts payable, you won’t be able to accurately evaluate your financial stability or plan for future expenses. It likely makes up the majority of your business’s outgoing cash, for expenses like bills and payments to vendors. Getty Images/Damir KhabirovĪccounts payable is a crucial part of your company’s financial statement. Implementing a reliable way of tracking accounts payable is an integral part of a successful business.
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