Business Bookkeepers - Accounts Payable
Accounts payable is a file or account that contains money that a company owes to its suppliers and has not paid yet.
Accounts payable is a form of credit that the supplier has offered to their purchasers, by allowing the purchaser to pay for the product or service after it has already been received.
Accounts payable is a strategic, value-added bookkeeping function that performs the primary non-payroll disbursement functions in a business. The accounts payable enables businesses to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of the entire payables process.
Accounts payable needs to be correctly managed for the following reasons. If the purchaser takes longer than the payment terms to pay the invoice – and this forms a pattern, it is possible for this supplier to provide a poorer than average credit rating.
The traditional accounts payable activities are liabilities to another party (e.g suppliers and/or tax authorities) and are paid based on the credit policies agreed to between the business and the supplier.
The bookkeeper takes on a much wider role including fraud prevention, cost reduction and cash-flow management.
Expense administration is usually closely related to accounts payable and sometimes these functions are performed by the same bookkeeper. The bookkeeper may even verify the employees’ expense report, confirming that receipts exist to support expense claims.
Having an external online bookkeeper will also help prevent embezzlement of funds because there is a distinct separation of duties.
With the expansion of telecommunications the bookkeeping services, even though located offsite – uploads the payables to the bank account and then the business owner has the final role of making the bank payment, thereby preventing the embezzlement of funds, and providing another level of internal control.
Accounts payable / bookkeeper must watch for fraudulent invoices.
Offsite bookkeeping services usually have multiple clients and have a broad knowledge of fraudulent invoices. As an offsite bookkeeping service – Business Bookkeepers has alerted clients to vendor invoices – that look like "real" invoices but in small print they state “this is not a bill”. These are common for directory listings or advertisements.
In accounts payable, a simple mistake can cause a large overpayment. A common example involves duplicate invoices.
An invoice may be temporarily misplaced and still in the non-approval status and when a supplier calls and inquires on the payment status. A duplicate invoice may arrive resulting in the duplicate being paid as well as the original.
Because bookkeepers have multiple clients they are often aware of scams in accounts payables. There are two scams which come to mind just recently. At Business Bookkeepers we noticed that a client have been invoiced and paid an account for $1450 from TMP Trademark Publisher – but if you search on Google you will notice an article written by a patent attorney warning businesses not to pay this account because it is a hoax.
At Business Bookkeepers we advised two of our clients who had been caught in this scam. One of our clients was able to cancel the payment – unfortunately the other client was unable to – but are now aware of the scam and will not pay the fee the next year.
The second scam was one which actually happened to us.
We were approached by a company to do advertising with a local pizza place. We asked them to email us the promo of what it will look like – and details of their company. We phoned the numbers on the advertising and the companies advised us in no way to take up the offer because they had been fleeced for approximately $12,000.
A bookkeepers role is to assist businesses in not paying suppliers too much, and too quickly. The aim of the game is maintaining a steady cash flow via accounts receivable and accounts payable.
