WHY ENTERING A SUPPLIER’S BILL IN MYOB OR XERO IS SO IMPORTANT?

Hands Up! Are you the typical business owner that when you receive a bill from a supplier, throws it in a folder/tray/desk draw or somewhere on your messy desk/dining room table? Do you say I’ll pay the bill when I have money in the bank? Then completely forget about it and get on with the job of running your business. Out of sight is out of mind. Right!

But is it good business practice? It is if you have a head in the sand approach to your business, wishing that sales just happen and hoping your suppliers don’t push you to pay them.

Suppliers chasing their money

And what happens when a supplier calls and says he needs to be paid. Do you know off the top of your head how much the supplier is owed? And what if the supplier provides goods or services a number of times a month? Do you take the supplier at his word and post a cheque or EFT the amount he says he is owed? What if he’s made an error? Can happen. Often does happen. As a bookkeeper, I have come across suppliers who re-email an invoice after the payment due date has occurred. Now you have two copies of the same invoice. You may pay the bill twice without realising, and never pick up the duplication.

Accounting software allows you to keep track of whom you owe money and when they’re due to be paid. If correctly set up, you will be alerted if an supplier’s invoice number has previously been entered, preventing the possibility of paying an invoice twice. If you can only pay part of a supplier’s bill or multiple bills, no problem, the software keeps a running balance.

Know how much you owe

Business owners need to know how much they owe their suppliers and when they need to be paid. Keeping on good terms with suppliers is important. If you make a habit of paying your bills on time or early, there is every chance you can negotiate a discount from your supplier. They also need the cash flow and are often quite prepared to come down to your terms. It may not be a huge discount but over a year these discounts really add up and add to your bottom line. Cash is king, and as a business owner you need to ensure tight control of the money flowing out of your business.

If you would like to discuss your bookkeeping requirements or how to improve your record keeping, contact info@bookkeepingconcepts.com.au