Accounts Reconciliation Blog

Finance plays a vital role in any organization. This department has the capacity to control the overall operation of any business. One of the most important aspects that it closely keeps track is the accounts payable. This is the account that deals with the total monetary value of debt that a company owes to suppliers and has not been paid yet. With this, purchasers are given the chance to pay these suppliers after the receipt of their products or after the completion of their services.

A company’s overall financial cycle can be regulated by accounts payable. If properly managed, it could result to several benefits for the organization. It could bring awareness in terms of financial changes. This could also increase profitability by the reduction of annual accounts payable. The growth and development of a business can also be tracked because of the several financial reports generated by this account.

Part of getting more business profits is to handle the accounts payable smarter. Your suppliers will also enjoy being paid on time causing a good relationship.  Accounts payable best practices can have a significant difference when you get to minimize late payment costs. These include late-payment penalties, interest charges, and lost prompt-payment discounts.

Actions done to accounts payable have a great impact on the trust between a company and its creditors. Whenever a company honors agreed-upon payment terms and pays its bills on time, it helps strengthen the business relationship. A company that has a streamlined accounts payable operation also saves money through the efficient processing of invoices with a minimum of staff and low cost of materials.

In a  business there are all kinds of expenses. From a business lunch to a company party money is spent which in most cases are good for the business. To keep track of the money that is spent it is a good idea to use an accounts payable voucher which will keep track of the money spent. Then whenever a bill comes in you can use an accounts payable voucher.

An accounts payable voucher is very easy to use. It is just a small sheet of paper where you fill in the following information: Name of company or name of person as it should appear on the check payment, amount to be paid and payment deadline. This simple sheet saved the accounting a lot of time. It made things so much easier for them to collect data without the need for verifying any data. The accounts payable voucher is also collected and compiled by the accounting department for proof.

Movies about the mob are often a hit. People love watching how mob bosses were caught. Several years ago there was a real life mob boss in Chicago who was suspected of killing a lot of people. He was eventually caught and placed behind bars but not for his murders but because he of tax evasion. That is probably an extreme example of how ignoring the IRS and accounts payable can lead to prison.

The IRS and accounts payable may seem unrelated. However, we all know that the IRS is an agency we shouldn’t be playing around with. As dutiful citizens we must all pay our taxes les the IRS catch us. As companies, all accounts payable should be settled lest you be questioned by the IRS. If you don’t pay your debts or file your taxes you’re going to be in trouble.

There are many things that you have to know when you open your own business. Knowing your target market, handling the IRS and setting up your accounting are a few. My biggest question was can someone please define accounts payable?

With some research, I could easily define accounts payable. Accounts payable is what the company owes to suppliers, individuals and other companies for the purchase of their product or service on credit. When I opened my business, my contractor gave me 15 days to pay him after he had finished constructing my store. That amount I owe him is part of my accounts payable. It is my duty to settle all accounts payable. When the accounts payable are all paid, my cash on hand will naturally decrease.

It is the job of some people to prepare the company’s financial statements. However the statements are done, the books have to be prepared first. There will be a need to do journalizing, the balance sheets and bookkeeping. You need to classify what you would place under debit and credit. You also need to decide what to place under accounts payable and accounts receivables. Accounts payable classification is needed so that a new accountant knows immediately what should be under accounts payable.

Accounts payable classification should be done as early as possible. It is much easier on the part of the accountant if she knows which fall under the accounts payable. This way there will be lesser mistakes. I remember when I was first doing accounting I would sometimes mix up my accounts payable and my accounts receivable.