LUTZ BUSINESS INSIGHTS
7 Accounts payable best practices for small businesses
emily olsen, client accounting services manager
Unless you always pay for products and services at the time you receive them, your accounting system contains an accounts payable element. This refers to any outstanding financial obligations you have.
Maintaining a healthy accounts payable system requires vigilance. Here are seven best practices for accounts payable that will help small businesses successfully manage what they owe. Every one of these will be faster, easier, and more effective if you’re using QuickBooks, as we’ll explain.
1. Safeguard your records and transactions
Limit access to your vendor records and bill-paying tools. If anyone else can get to your accounting data, whether it’s on your hard drive, in the cloud, or on paper, guard that information closely. Make sure that no unauthorized payments are going out. QuickBooks has built-in safeguards like password protection and user access limits.
2. Keep your accounts reconciled
If you have access to your financial institutions’ websites, you can see what transactions have cleared and mark them off in your own accounting records. QuickBooks imports transactions from many thousands of banks. You can reconcile what comes in every day instead of waiting for a monthly statement.
3. Consider using early payment discounts
Sometimes this is a good idea, and sometimes not, depending on the state of your cash flow. If it’s not a problem to tie up funds before a bill is due, you might take advantage of such a discount. QuickBooks tracks this information about each vendor.
4. Create an A/P scheduling system
Know what you owe for given time periods, not just what’s due on which day. If you’re doing your accounting manually, this will be challenging. QuickBooks comes with numerous reports built in.
5. Track uncashed checks
You need to know how much of your account balances are available to you. Uncashed checks to vendors can complicate this. Contact vendors when a check hasn’t been cashed within a reasonable amount of time to ensure that it was received. QuickBooks’ proactive reconciliation tools can help you spot problems like this.
6. Build good relationships with your vendors
You do this by being an asset to their businesses. Beyond always paying your bills on time, it’s smart to be diplomatic and helpful when there are problems with products or services. Give them advance notice when you anticipate placing a large or unusual order. Refer other businesses to them. Communicate with them when you’re especially pleased by what they’ve provided. QuickBooks allows you to create detailed profiles (including a thorough history) of your vendors, so you’re always up to speed.
7. Automate your accounts payable
Automating your accounts payable can save you valuable time and we can assist your business by helping you get set up with QuickBooks. If you have more complex needs like multiple approvers or want the ability to store your bills in the cloud, we can help with that as well. Bill.com is a solution that will integrate with QuickBooks to help take accounts payable automation to the next level. Contact us if you have any questions.
ABOUT THE AUTHOR
EMILY OLSEN + CLIENT ACCOUNTING SERVICES MANAGER
Emily Olsen is a Client Accounting Services Manager at Lutz. She began her career in 2016. She specializes in providing outsourced accounting services to clients with a focus on QuickBooks, tax and payroll compliance, small business consulting, as well as software implementation and training.
AREAS OF FOCUS
- Outsourced Accounting
- Tax & Payroll Compliance
- QuickBooks Training & Support
- Accounting Software Consulting
AFFILIATIONS AND CREDENTIALS
- Certified Public Accountant
- MAcc, University of Nebraska, Omaha, NE
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