Strengthening the Process of Accounts Payable for Small Business

Accounting for small businesses can be a troublesome affair. You have a lot on your plate as you are settling up your small business and amid all the marketing, pitching, and client management, the accounting and bookkeeping processes somehow take the backseat. This can be harmful for any business, no matter the size as accounting and bookkeeping make the backbone of any business.

So, how can you strengthen your small business accounting bookkeeping function? Let’s find out in this blog!

What are accounts payable?

Accounts payable are outstanding payments due for goods and services purchased by a business from any vendor or supplier. These are liabilities that businesses must track diligently to ensure there are no overdue on the balance sheet. Some examples of accounts payable include equipment, leases, subcontracting services, raw materials, travel, supplies, etc.

There are many payments due for any business so keeping track of all these expenses can be confusing. However, keeping track of every individual account payable is crucial to ensure no financial obligations on the business.

This is where bookkeeping for small business owners comes into play and hence must be a strong and efficient process.

Setting up an efficient accounts payable process

Bookkeeping small business processes must be very efficient in terms of recording all the accounts payable in time to ensure smooth payments and no outstanding dues. Here is a step-by-step guide to setting up the process of accounts payable for small businesses.

Make a chart of accounts

Using a small business online accounting service, you must start maintaining a chart of accounts payable for the business. This will give you all your transactions in one place, making it easier to track the transactions. A typical chart for accounting must have the following information:

Vendor name
Account number
Invoice number
Invoice date
Expense type
Payment deadline and status

2. Create a list of your vendors

Any small business would deal with several vendors and having a list of them with crucial details makes small business accounting easier and efficient. This also helps in vendor management and relationship building ensuring better discounts and high quality from the vendors.

An ideal vendor list must have the vendor’s name, company address, payment terms, and any other information as per the vendor’s agreement.

3. Invoices received from vendors

As soon as you receive an invoice from the vendor, make sure to read it thoroughly to ensure error-free receipt. The information from the invoice now goes into the chart of accounts we made in the first place.

Match the information with your purchase order before you proceed with the payment. Strong bookkeeping in small businesses is critical to make this function stronger.

4. Setting up a process for outstanding invoices

For strong accounting and bookkeeping for small businesses, it is crucial to review your outstanding payments once weekly. Check the outstanding payments, prioritize them, and start paying them off immediately to avoid penalties. Choose the best payment method to pay the invoices and always be considerate of the preferred payment method of the vendor.

Hiring accounting service for small business

Considering that a small business owner has a lot to look upon, hiring small business online accounting services is the best way to proceed. At DeFinance, we offer you reliable solutions for easy small-business accounting. You can choose from our array of bookkeeping services for small businesses and ensure that your accounts payable are tracked and paid promptly. As a reliable financial coach for small businesses, we strongly recommend you make your accounts payable function strong as these liabilities can at any time cause the death of your business.

Choose online accounting and bookkeeping with DeFinance and put your accounts payable worries to rest.