Business tips from the Ascentive team
Although it may seem like a minor problem, you can lose a lot of money when your book keeping system fails to keep up with the growth of your business. A simple Excel file and a business check-writing system are usually enough to keep accounts payable adequate for businesses in their early years, but if your business has grown and you're now spending more than a few minutes a day on managing payments, experts say you should look to improve your system. With the right amount of streamlining, you should be in great shape. Here are some terrific tips for upgrading your accounts payable process.
Reevaluate your Basic Structure
If you are receiving more than a bill or two a day, you should be using an accounting program, such as QuickBooks. If your business has several employees, it's just fine to have an administrator involved in entering data into the accounts payable, but you should plan to keep final tabs of it always. Some basics you should already be doing include:
• Every incoming bill should be entered into your accounts payable file daily, with date of arrival, date due, relevant account information and comments.
• Business credit-card items should be filed on the same day they are expensed.
• Employees should trained in filing expense reports. If evaluations show you that it's a drag for them, consider implementing a piece of software that will help. Also, segmenting all employee expenses onto individual business credit cards can both eliminate false reporting and ease uploading expenses.
• For classic paper bills, retain the stub and envelope for records as well.
• Bills should be paid promptly, but en masse. Set a time at least once a week for yourself or your accounts payable staffer (or assistant) to do this. If it's someone other than you managing payments, be sure to review approve the list before sending out checks.
Get an Advisor
Next, delegate some of your bookkeeping responsibility to an assistant. You may also consider a certified public accountant or even a part-time CFO. An accountant with a regular monthly relationship with your company can help streamline the process by advising you on timesaving methods and they can catch costly errors. A part-time CFO can also step in if your needs are more strategic in nature, or if you are setting up the business to scale.
To avoid fraud, you can institute a variety of checks and balances. One simple method is to separate duties. A junior employee can process and print a check, but a senior one should be required to review and sign it. This dual duty can be incorporated into most basic business accounting software, so employees can only access and perform assigned functions. For checks that exceed a predetermined amount, requiring a second signature from you or your CFO is a best practice. Separating the process of adding a new supplier to your system from the ability to issue payment is also advised.
Working with Your Accountant
Finally, when you're transitioning to a new accounting software, accountant, or part-time CFO, it's best to make a transition to a streamlined accounts payable system at the start of your fiscal year, or ask your accountant to help you ease the transition from the start, by inputting the rest of the year's previous data into your new system. Working with the same accountant throughout the year and through reporting your taxes is the best way to streamline the process. If that's not possible, you'll want to make sure you have documentation to support your own accounting of payments, including transaction confirmation from all your suppliers.