Accounts Payable Basics Every Small Business Owner Must Know

A small business that depends on their suppliers and several vendors must invest in a good accounts payable software. Small business owners who have been struggling to keep up with payments and creditors will find that this type of software will make managing the company’s accounts easier.

However, there is no denying that any new software can be a little confusing, even to the most technologically aware business owner. To make the transition from paper invoices to the fully automated accounts payable system less confusing, here are some basics you should remember:

#1: Know Who You Owe, How Much You Own, And What You Owe

Many small business owners already use some form of technology when it comes to paying for recurring bills. A lot of owners set up an auto-payment for different bills while some choose to simply pay all their invoices through online systems. After each payment is made, the rest is forgotten and they move on.

If you are currently doing the same payment methods that are mentioned above, it’s time to take a step up. Most often than not there are invoices that are paid twice and some that aren’t paid at all. It is always good to check your accounts payable system to keep track on who you are paying, what you are paying for, how much, and how often to eliminate any payment discrepancies in the future.

#2: The Difference Between Expenses And Accounts Payable

At first glance it will look as if expenses and accounts payables are the one and the same, while both involve spending the company’s money, that is where their similarities come to an end. To avoid any confusion in the future, just remember that AP or accounts payable are incurred costs that have not been paid yet. AP’s are classified as liabilities when written on the balance sheet.

Expenses are the costs that are already paid and these are usually deducted from the total revenue to help compute for monthly loss or profits. This is very confusing for a business owner who is just starting, but thankfully all the hassle and stress of identifying which is an expense and an AP can be automatically done by an accounts payable software.

#3: Automation Is A Must

The first mention of AP automation may sound daunting at first, especially for a business that has relied on manual procurement for a long time. While there is no denying that the automation process is a little awkward, it is worth it in the long run.

Employees who are used to the manual AP process might feel threatened with the new system, but simple training and assurance on your part as their employer can put them at ease with the AP software.

The Pros Outweigh Any Of The Cons

After the automation, business will be able to benefit from the fast and accurate documentation process. The automation of your current AP system will eliminate many bad business practices that are costing you profits. There is no need to stress over invoice processing when your AP system is a fully-functioning automated system.
Nexus Systems’ accounts payable software allows you to properly manage your accounts payable with better workflow and efficiency. Contact us today for more info!