One of THE most important things a business can do is maintain a good relationship with their vendors and PAY BILLS ON TIME.
Here are a few tips to consider when creating your Accounts Payable process.
Be sure that your Vendors are set up properly in your accounting software. Include a contact name / phone number / email address, payment address, and payment terms
Enter bills in a timely fashion. Be sure to verify vendor details for each entry (payment terms/due date and payment address), add a description if necessary (when in doubt add detail!), and attach the bill in the accounting software for easy reference later. Also consider making notes on each bill as they are received, such as date received, initials from person(s) receiving and/or entering the bill, and when possible, the coding to be used in the accounting software. These notes may come in handy if you ever need to refer back ;)
PAY BILLS! Consistently review the Unpaid Bill Detail report and be sure to pay far enough in advance to allow for mail time, but not so early that it will negatively affect your cash flow. Hint: Paying online whenever possible can be a beautiful thing ;)
Separation of duties. You don’t need 10 hands in the pot, but at least 2 isn’t a horrible idea. It will help to keep each other accountable to be consistent. Example: Business Owner receives bill, adds notes, and sends to Bookkeeper for entry into accounting software; Bookkeeper verifies vendor information and enters bill; Bookkeeper prepares weekly Unpaid Bill Detail report and sends to Business Owner (along with bank account balance information) for approval to release funds; Business Owner approves/denies payment; Bookkeeper prints checks/initiates payment; Business Owner signs checks; Bookkeeper/Business Owner mails payment.
As always, be sure to implement a process that works best for YOUR business, but consistency is key (where have you heard that before??). Also be sure that your process is CLEAR and that everyone involved understands their part. If you’re looking for some help in this area Contact Me and let’s chat about it!