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Never pay Supplier’s bills from a Statement!

Posted by   |   May 25th, 2016   |   Categories: Business Fundamentals

As business owners, we are busy and for many of us record keeping is sometimes a price too high to bear. If your business is small, you have all the facets of your business in your head, don’t you? Or do you?

What type of business do you run? If you purchase from regular suppliers, there’s a good chance that you buy products and services from your suppliers more than once a month. Do you know off the top of your head how much, to the cent you owe your suppliers? Do you know how old those bills are? Do you know the terms of payment you have established with your suppliers?

As a contract bookkeeper, I can be required by clients to pay supplier’s bills, or in accounting jargon Accounts Payable (A/P). I have taken over the responsibility left by owners or the previous persons paying the bills and been witness to at times huge messes that I have the pleasure (sic) of cleaning up in the role of bookkeeper. It can be an expensive exercise for the business owner to put right.

Does this following scenario sound familiar? You receive a bill/invoice from a courier dropping off products, or you received the bill via fax or email? You drop the supplier’s bill in either a tray, drawer, folder or somewhere on your desk under a pile of other stuff. You forget about it as you go about your busy day. You get rung up weeks later by the supplier chasing you for money, you ask how much you owe, write out a cheque or transfer an amount. A day or so later a statement arrives from that supplier with those same amounts you just paid. You throw that statement in the same areas where you throw your invoices. Finally some time down the track you find the time to pay bills. You pick up the statement, look at the balance amount and write a cheque or transfer the money.

What a mess. You have just paid some bills twice. Now, if the supplier is honest, they will ring and explain the double payment. If they are honest! What should you do?

If you use an accounting software program, enter every invoice you receive from a supplier. If you own a café/ restaurant or you’re a tradie, for example, you may have a running account with various wholesalers, and may receive a number of bills from them during the month.

Keep all the supplier’s bills together, either in a concertina folder, an arch lever folder or any method which makes sense to you. Once the statement arrives, open up your accounting software to the Accounts Payable report. Does the outstanding amount in the Payables Report match the supplier’s statement balance? If not, why? Have you received a duplicate invoice, or maybe a bill wasn’t emailed. If you have entered a bill twice, delete it. If you did not receive a bill or can’t locate it, call the supplier and ask them to re send it. Once you have all the bills that match the supplier’s statement, you’re in control of your accounts.

Positive cashflow in business is hard enough. Don’t make it more difficult by not keeping on top of your bills or double paying. How do you pay your bills?

If you have accounting software or plan to purchase accounting software and would like to learn how to become an expert entering and paying bills, go to myobtrainer.com.au and enter your details.

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