- 1st May 2018
- Posted by: audrey
- Category: Accounts, Accounts Payable, Administration, Business Records, Finance
For small businesses in particular, managing accounts payables or creditor payments can sometimes be stressful.
But, having a simple payables routine in place is just one aspect of efficient Cash Management that can greatly assist with your cash flow and budgeting.
Some considerations for an effective Accounts Payable Routine include:
- Knowing your Creditors & their payment terms
- Processing invoices quickly and accurately
- Having a visual on what payments are falling due and when
- Knowing what invoices you’ve already paid so you don’t pay twice
- Using creditor statements for reconciliations only & NEVER pay to a statement balance
- Staying mindful of spending and purchase requests
Be sure to keep a record to identify:
- Supplier Paid
- Payment Date
- Amount Paid & Payment Method
- Invoice or Job References
Depending on the nature of your business and your relationship with your suppliers, you may be able to negotiate payment terms that are agreeable to both you and them. These include:
- Payment on Account
- Payment on Receipt of Invoice
- Direct Debit Mandates
Where you can, chose payment methods that work best for you. You can pay by:
- Cash – remember to ask for a receipt.
- Cheque – not as popular now since the advent of online banking
- Bank Transfer or EFT (Electronic Funds Transfer) – a much more common practice now.
- Debit or Credit Card
- Direct Debit or Standing Order
An important note to end on:
Regardless of payment method, always be aware of your creditor’s terms and conditions. Should you run into difficulty, don’t ignore your suppliers. Contact them and re-negotiate your terms. They will understand and will be happy to facilitate you.
After all, they are just like you and are aware of the difficulties that can unwittingly befall business owners.
For further information on maintaining an efficient Accounts Payable Process, contact Bps today. We’re always happy to advice and support.