Can You Pay Your Bills?
“Net 30? I hope I don’t forget to pay this”, you think as you open an email from one of your new suppliers. You’ve received plenty of personal bills over your lifetime, but this is the first invoice for your business. Turns out to make money you have to spend some too.You haven’t really thought about this part of the business until now and you definitely want to do this right.
Having a fully functioning accounts payable system will help you build strong relationships with your vendors and strengthen your reputation as well. It will also help you get a grip on your liabilities and set you up for making better financial decisions.
Here are a few tips to help you set up a successful accounts payable process:
Enter the bill as soon as it's received: It’s easy to lose track of invoices in the mass of emails you receive. Recording it in your accounting system right away does not mean you need to pay it immediately but helps to ensure it doesn’t get lost and forgotten.
Set recurring bills on autopay: Many utility vendors offer autopay options. These set-and-forget options are great for continuous monthly expenses that don’t have large variances and are not substantial.
Set scheduled emails: Most accounting platforms have the ability to create custom email schedules for reports. Set up a schedule to have a weekly (or monthly) Accounts Payable report emailed on a set day of each week (or month). A quick lookover of the report can help you determine which invoices are due for payment.
Set up approvals: If you are working with a VA, employ an individual to handle your accounts payable, or outsource, it is important to have an approval policy. Approval policies can include express approval for all invoices, or invoices over a certain amount, before the scheduling of payment. This helps you keep a handle on cash flow, avoid duplicate payments, and prevent unauthorized transactions.
Choose your payout platform preference and stick with it: There are many payout platforms such as Bill.com, Gusto, and Melio. Each has its own pros and cons. Do your research and try your best to stick with one service. This is especially important for keeping track of contractor payments in anticipation of filing annual 1099s.
Check funds before scheduling payment: Make it a habit to check your available funds along with estimated cash flows to ensure your payment is funded.
Keep up on documentation: Make sure you collect W-9 information from vendors and contractors you pay throughout the year. Additionally, hold on to those bills by uploading directly into your accounting system.
Having a solid accounts payable system in place before your business starts to scale can help you go from surviving to thriving when invoices go from one to one hundred. And as your business grows, continually assess ways to improve on or automate your processes so you can have one less thing to think about.
If you need help with your Accounts Payable process, schedule a discovery call with us!
by: Erin Pohan
