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 giving up and contacting the payee and requesting another bill feeling ashamed that you lost it in the first place. You are not alone. We all have that stressed anxiety when forgetting a task that needs to be done. Here are accounts payable tips that will help reduce stress while doing these tasks.
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 separate email address for just bills. Then, when you create online accounts, use that email address as your contact. It will help eliminate bills getting lost within the vast emails you receive on a daily basis.
For paper bills: Have a place to store your paper bills like a “to pay” bin. This can be a wire bin placed near your desk.
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 and 3. store the electronic copy under the “bills to pay” folder on your computer’s desktop. By doing this, you will only have once invoice copy and are more likely to not over pay the vendor.
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 an efficient retrieval system: Enter all your bills separately. Add the invoice issue date, invoice amount, and invoice number and then include it in your register. QuickBooks and QuickBooks Online allows 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 section for vendor name if you decide to use a spreadsheet. Keeping track of all the bills that come in will speed up the process of finding a particular invoice if there is a discrepancy with the vendor.
Create an easy but reliable system for Petty Cash: If you use cash often, you need a good system that will help you and your business eliminate fraud. Only have one trusted person be responsible for it. Have them reconcile it monthly to make sure it matches with the transactions on your spreadsheet. Be sure to keep the receipts for all the activities paid in cash. If you sign up for Admin News, you will receive a free PDF or Excel layout to track Accounts Payable and Petty Cash.
Always have a savings account to store money for bills.
If you have the money now and have the time to pay, just pay it now. If you don’t want to schedule 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 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.
Allocate the amount of money you need for taxes, 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 it and when it comes time to pay it, you can transfer it back and pay the taxes. Remember, if you don’t do estimated taxes, you may be penalized by the federal government, state, and local.
Always, always, always pay your payroll liability on time. After you are 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 you do payroll. But, you don’t need to use them, you just need to pay them on time. It’s OK to pay your payroll liability taxes early. I have done it for years for my payroll clients. But, you can get penalized for NOT paying your payroll liability taxes on time. Remember: this is not your business’ money. It’s money that is for your employees and taxes that you have collected for the government and others (insurance and retirement).
I hope this inspired you to go through your accounts payable system and refine the process. 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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