Financial information

The Benefits of Accounts Payable Reports

Accounts Payable (AP) are the money your business owes its vendors and suppliers. These purchases can include rent, utilities, inventory and the cost of operations. When you make a purchase, the seller or supplier invoices you. You then make payment at a later date.

In comparison, accounts payable reporting is the process of tracking and reporting these business expenses. This continuous reporting process ensures that your business keeps accurate financial records.

Editor’s Note: Looking for the right accounting software for your business? Complete the questionnaire below to have our supplier partners contact you regarding your needs.

Why is Accounts Payable Reporting Important?

Businesses of all sizes can benefit from accounts payable reporting, but it’s essential for small businesses. You need to know if you are paying the bills on time and if you are paying the correct amount.

Here are some reasons why accounts payable reporting is important:

  • Make sure the bills have been paid. Accounts Payable reports allow a business to track credit spending and ensure invoices are paid on time. If your business consistently pays its suppliers late, your credit rating could suffer. A bad credit rating can have a negative impact on future loan decisions.
  • Prepare for tax season. Accounts payable reporting also ensures that you have the information you need during tax season. This information makes it easier to work with your accountant and meet your tax filing deadlines.
  • Maintain a good relationship with your suppliers. By keeping control of your accounts payable reports, your business can maintain a good relationship with its supplier. This positive relationship can lead to more favorable payment terms or opportunities to save money with early payment discounts.
  • Keep accurate financial records. Accounts Payable Reports help keep your business financial data accurate. This information can help you assess your working capital, determine which invoices need to be paid, and document problems as they arise.

Types of Accounts Payable Reports

Let’s take a look at some of the most common types of accounts payable reports that your business will run.

Report on the age of invoices

An invoice age report includes a list of all unpaid accounts payable invoices. This information can help determine how much the business owes and which invoices need to be paid first.

An invoice age report includes details like these:

  • Names of suppliers
  • The amount you owe each supplier
  • When the invoice is due
  • How long have you held debt

An invoice age report will help you spot missed payments and see how past due an invoice is. To avoid falling behind on supplier payments, you should run an Invoice Age Report on a daily or weekly basis.

Did you know? This report can help you manage cash flow, plan future expenses, determine which vendors to pay first, and find ways to negotiate payment terms.

AP trial balance

The AP Trial Balance lists the final balance of each general ledger account and includes all unpaid or partially paid invoices. This report ensures that a company’s debts match its credits and that all journal entries are correct.

Generating an AP Trial Balance is a bit like balancing a checkbook. He reviews all payments to make sure they match the total amount owed. If you’ve accidentally overpaid a vendor or missed a payment, your AP trial balance will help you spot it.

adviceAdvice: If your credits and debits don’t match, it could be because your business has received inventory but has not yet received the invoice. Once you receive the invoice, your accounts will reflect it.

It is a good idea to generate an AP trial balance monthly or quarterly. Running the report too early could result in inaccurate information.

Voucher activity report

A payment voucher is a document that businesses use to track the supporting information needed to approve payment on an invoice. This is an internal audit check that ensures that every invoice is paid and the company receives goods and services.

A voucher activity report includes this information:

  • The name of a seller
  • The company’s order form
  • The total amount due
  • The due date
  • Discount conditions offered

A voucher activity report tracks payment vouchers made over a period of time. This can help you see how much the company spent on a particular project or how much you are spending in different departments.

Reconciliation of accounts

The open reconciliation report presents all the accounting activity concerning payment vouchers over a determined period. This report helps you determine if your business is making accurate and timely payments to its suppliers.

You can use the open reconciliation report to check unpaid debts. This report will also tell you if you are sending payments to the correct vendor.

If there is a difference in the general ledger, it is most likely due to inaccurate reports or a missing payment. Reconciling accounts can also help you spot any fraud issues.

How accounting software can help you

The best way to stay on top of your AP reports is to use accounting software. Instead of manually entering your financial data, the right accounting software does the heavy lifting for you.

You can use this software to automatically generate reports and see your payment trends over time. Here are some of the benefits that accounting software can bring to your business:

  • View supplier information. You can use accounting software to view information about a specific vendor. You can see how much you currently owe this vendor and how much your business has paid them over the past year. You can also see if your business has any opportunities to save money by taking advantage of early payment discounts.
  • Keep accurate financial records. Entering your financial information manually is not only cumbersome, it is also prone to errors. The accounting software automatically syncs with your bank account and reconciles your financial transactions for you. And if your business is ever audited, accounting software will save you a lot of time since you will already have the financial data at hand.
  • Generate reports automatically. You can use your accounting software to automatically generate financial reports for your business. These reports help you track your business’s expenses and see how much it currently owes. You can generate these reports as often as needed.

adviceAdvice: If you don’t know how to choose accounting software, be sure to check out our reviews of the best accounting software for business. The right accounting software will largely depend on the size of your business and how you plan to use the software. Learn more about the best options in our QuickBooks Review and our Xero Review.

The bottom line

As a business owner, you need to stay on top of your accounts payable reports. Tracking the reports described in this article will allow you to stay on top of unpaid invoices and maintain a good relationship with your suppliers. It will also help you keep accurate financial records.

If you need help with your AP reports, the right accounting software can make this process easier. Accounting software reduces the risk of human error and automatically generates these reports for you. This way you know your financial records are accurate and up to date.


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *