| New small businesses and entrepreneurs quickly | | | | takes the authorized amount from the designated |
| discover that the accounts payable process can turn | | | | bank account, then either issues a paper check to the |
| into a monster. If it isn’t handled properly, unpaid | | | | vendor, or electronically transfers the money to the |
| bills pile up and get paid late, making vendors angry and | | | | vendor’s account. The low monthly fee is not |
| possibly damaging the business’ credit rating. | | | | much more than the cost of postage and paper check |
| Once a consistent procedure is developed, the | | | | printing. |
| accounts payable process can go smoothly. If you are | | | | 4. Enter unpaid bills in a timely manner. Do not delay |
| in business by yourself and cannot afford to hire | | | | entering unpaid bills into the accounting software. |
| outside help, here are ten tips to help establish a | | | | Waiting too long to enter them can result in late |
| consistent accounts payable process: | | | | payments, finance charges, and possible damage to |
| 1. Purchase accounting software with an accounts | | | | the business credit score. |
| payable module. In today’s business and | | | | 5. Enter unpaid bills correctly. It is very important to |
| computer world, some may wonder why this even | | | | examine the bill and enter the correct vendor name, bill |
| needs to be a suggestion in a list such as this. | | | | due date, and invoice number. Entering an incorrect |
| Surprisingly, Internet research indicates that up to | | | | due date will result in a payment occurring sooner or |
| one-half of micro businesses (defined as under ten | | | | later than necessary. After entering them, stamp them |
| employees) do not use accounting software, instead | | | | as “Entered” or “Posted” |
| using spreadsheets or even paper ledgers. | | | | using a rubber stamp with red ink. Be sure to write on |
| The advantages of using accounting software with an | | | | the bill the date they were entered. |
| accounts payable module are tremendous and far | | | | 6. Organize unpaid bills. If there are many bills, organize |
| outweigh the cost and learning curve. When used | | | | them in an alphabetical file system to make them easy |
| correctly and consistently, the software will serve | | | | to locate. However, a small amount of bills may be |
| several important functions: a reminder as to when bills | | | | placed in a single file. |
| are due; a generator of payments; and a recorder of | | | | 7. If cash is tight, determine your cash flow before |
| payments into the checking register. The time savings | | | | paying bills. Simple cash flow reports are easy to |
| alone over doing these functions manually warrant the | | | | generate in Excel. Start with the actual amount of |
| purchase of accounting software. | | | | cash available to pay bills. Include amounts in checking |
| 2. Utilize the vendor’s auto-debit or auto-charge | | | | accounts, savings accounts, and lines of credit. |
| feature, if available. Utility companies, and other types | | | | Subtract bills that need to be paid immediately. If there |
| of companies who have recurring payments, often | | | | is not a comfortable cushion of cash left over, reduce |
| offer auto-debit or auto-charge services. When used, | | | | the the amount of bills to be paid. |
| the amount due is automatically deducted from the | | | | 8. If cash is tight, communicate with any vendors who |
| business checking account, or charged to the business | | | | must be paid late. No vendor appreciates being paid |
| credit card, on the date shown on the invoice. Often, | | | | late, but they do appreciate open communication. If you |
| the paper invoice is still mailed, but sometimes the | | | | must pay a vendor late, let them know, and let them |
| vendor insists on emailing invoices when this service is | | | | know a specific date you plan to pay them. Then, |
| activated. Either way, the invoice is available for | | | | make every effort to pay them by that date. |
| viewing before the amount is deducted or charged. | | | | 9. Pay bills on a consistent timetable. Establish a regular |
| When used in conjunction with accounting software, | | | | timetable to pay bills - weekly is a good and common |
| the amount can be post-dated into the checking | | | | choice. |
| register or credit card register. If the company has a | | | | 10. After they are paid, stamp them correctly, then file |
| good and consistent cash flow, this procedure saves | | | | them. Buy a rubber "Paid" stamp, and use it on each bill |
| time and money by avoiding the bill payment process | | | | that has been paid. Write the check number (or |
| altogether. | | | | payment method), date paid, and amount paid on the |
| 3. Utilize the software’s internal “bill | | | | bill. File them according to how they appear on the tax |
| pay” feature, if available. QuickBooks, for | | | | return. In other words, file Utilities together, file Office |
| example, offers a “Bill Pay” feature that is | | | | Supplies together, file Travel and Entertainment |
| very inexpensive and easy to use. Once established, | | | | together, etc. This makes them easy to locate in the |
| bills are paid electronically according to the software | | | | event of an audit. |
| user’s authorization. The bill payment service | | | | |