Accounts Payable Tips Every Owner Needs to Know

Have you ever lost or forgotten to pay a bill? When it happened, how did you feel going on a frantic search for the bill/e-bill, wasting time and energy, finally realizing you must have deleted it? Anxious? Then, give up and contact the payee and request another bill, feeling ashamed that you lost it in the first place. You are not alone. We all have that stress and anxiety when forgetting a task that needs to be done. Here are small business owner accounts payable tips to help reduce stress while doing these tasks.

How do I stay on top of my business accounts payables?

Have a Simple System to Pay Bills for Your Business.

If you want to go paperless, you can use a bill pay system through your bank, which will send the checks out for you.

Use a different business email address for bills

Use a separate email address for bills. Then, when you create online accounts, use that email address as your contact. This will help eliminate bills getting lost in the vast emails you receive daily.

Have a designated spot to store paper bills/electronic bills

For paper bills, Have a place to store them, like a “to pay” bin. This can be a wire bin placed near your desk (affiliate).

For electronic bills: Have a 3-part system in place. If you receive emails with invoices attached,

1. Print out the bill only once,
2. Add it to the “to pay” bin,
3. Store the electronic copy under the “bills to pay” folder on your desktop.

By doing this, you will only have one invoice copy and are less likely to overpay the vendor.

Create a weekly billing chore.

Create a regular billing task. It can be once a week or once every few weeks. If you do it weekly, Friday afternoon works nicely. It will keep you on track and minimize the loss of any “to pay” bills.

Create a long-term store retrieval system.

Create an efficient retrieval system: Enter all your bills separately.  Add the invoice issue date, amount, and number, and then include it in your register. QuickBooks and QuickBooks Online allow you to add it to the vendor section on their app. You can create a spreadsheet to help manage this as well. Be sure to have a part for the vendor name if you use a spreadsheet. Keeping track of all the bills will speed up finding a particular invoice if there is a discrepancy with the vendor.

Create a well-organized Petty Cash Tracking System.

Create an easy but reliable system for Petty Cash: If you use cash often, you need a good system to help you and your business eliminate fraud. Only one trusted person should be responsible for it. Have them reconcile it monthly to ensure it matches your spreadsheet’s transactions. Be sure to keep the receipts for all the activities paid in cash.

Always have a Savings Account to store money for Bills.

If you have the money and the time to pay, just pay now.

If you don’t want to schedule a payment for a particular bill, you can always allocate the money for the bill. To do this:

a. Go to your register.

b. Write the payee’s name and amount. But don’t write the check number.

c. Then, when it is time to write the check, just fill in the check number.

By filling in the check number, it will remind you that you wrote the check.

Another way to allocate money is to write up the check, prepare the envelope, and put a sticky note on it, saying “MAIL ON ________ (fill in date).” Then place the envelope in an area to remind you to mail the bill on that date. I have used this method for payments that I need to bring to a vendor, and it works pretty well.  No lost checks.

Visit our How To Create A Small Business Emergency Savings post for more details on how to set up a savings account.

Allocate the money you need for taxes and divide that amount into quarters.  

Then, divide the amount into monthly installments. Schedule an automatic transfer into the savings for that monthly amount every month. It will automatically transfer the money; when it comes time to pay it, you can transfer it back and pay the taxes. Remember, if you don’t pay estimated taxes, you may be penalized by the federal, state, and local governments.

Always, always, always pay your payroll liability on time.

After you have finished your payroll, have your bookkeeper take the liability taxes out and pay the taxes right away.  The tax agencies give companies deadlines depending on how frequently they do payroll. But you don’t need to use them, you just need to pay for them on time.  It’s OK to pay your payroll liability taxes early. I have done it for years for my payroll clients (affiliate). But you can get penalized for NOT paying your payroll liability taxes on time. Remember: this is not your business’s money.  It’s money for your employees and taxes you have collected for the government and others (insurance and retirement).

I hope this inspired you to review your accounts payable system and refine the process.  

Feel free to visit some more posts about the small business accounts payable topic.

Accounts Payable and Your Business: What You Need to Know

Do you have any tips you would like to share?  What did you find interesting? What would you like to try? Please share in the comments below. I would love to hear from you.

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