Accounts Payable

accounting-investment-financial-online-bankingAccounts payable are those debts owed by your company to your creditors for goods purchased or services rendered. Having open account credit will allow your company to conduct more extensive operations and use your financial resources more effectively. If you are going to have a good credit record, the payment of these invoices must be timely, and you will need an efficient system for keeping track of what you owe and when it should be paid. When your accounts payable are not numerous and you do not accumulate unpaid invoices by partial payments, you may wish to eliminate accounts payable records and use an accordion file divided into the days of the month. Invoice Payable may be directly filed under the date on which they should be paid, taking into account discounts available for early payment.

Format for Accounts Payable

If your Accounts Payable are stretched over a longer period, you will need to keep separate records for the creditors with whom you do business. The form used will need to include these categories:

  • Invoice Date: This will tell you when the transaction took place.
  • Invoice number: If you need to refer to the actual invoice, the number makes it easy to retrieve. File unpaid invoices behind the record.
  • Invoice amount: Tells the amount of the transaction.
  • Terms: Tells the time period allowed until invoice is due and also if a discount applies.
  • Date Paid: Shows when you have paid the invoice.
  • Amount Paid: Shows you whether you made a partial payment or paid the invoice in full.
  • Invoice balance: Tells you what portion of the invoice is not paid.
  • Header information: The creditor’s name, address, and phone number will tell you where to send the payments and how to make contact.

You will be billed regularly for the balance of your account, but the individual records will help you to know at a glance where you stand at any given time. They should be reviewed monthly and an attempt should be made to satisfy all your creditors. After the invoice is paid in full and the payment is recorded, mark the invoice paid and file with the rest of your receipts. At the end of your accounting period, the total for Accounts Payable should be transferred to the Current Liabilities portion of the Balance Sheet.

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