Archive for Bookkeeping

4 Tips for Successfully Managing Accounts Payable

4 Tips for Successfully Managing Accounts Payable

Laura A. Ehle | February 18, 2015| LAE Business Services, Inc.

APNo what matter what size your business is, paying bills will always be part of it. Whether it’s the monthly operating expenses, an occasional order to pay or a fully staffed accounts payable department managing hundreds or thousands of invoices.  By implementing best business practices you can streamline your accounts payable process and be prepared for future growth.


Below are 4 tips to help you successfully manage your accounts payable:

1. Simplify Your Accounts Payable Process

  • Reduce the number of check runs to every other week.
  • When the accounting staff prepares check runs, they should have the invoice, any backup (packing slips, pod’s, etc.) ready and invoices approved by the appropriate department heads before coming to you for signatures.
  • Make Accounts Payable aware of any cash disbursement ceilings for each check run so they can then select the most important invoices to pay if cash is tight during that payment cycle.
  • Empower your staff with decisions that will make your life easier and are not dangerous for them to make. The decision to make partial payments on larger balances, or delaying payments to vendors who have a higher tolerance on due dates are a couple of examples.

2. Use Technology

  • Analyze and reduce errors such as paying incorrect amounts, incorrectly entering check numbers used to pay vendors, and paying too early or too late.
  • Make sure your accounts payable module is set up correctly so that transactions flow properly. You may need to use a consultant to make sure your accounting software and accounts payable module are correctly configured, or you could cause more problems than you solve.
  • Have Accounts Payable staff enter terms for each vendor in which the system can default to, such as Net 30, Net 60, etc. Terms are often provided by the vendor, and are usually printed on the face of their invoice.
  • If they don’t send them already, require your vendors to send monthly statements to ensure you’re not missing any invoices.
  • Run aging reports so you know what is in the pipeline.  You may have a small check run this period, but could have a large one coming up that you didn’t know about until looking at these reports.
  • Use laser printed checks, which will update the system automatically, marking which invoices have been paid and with what check numbers.

3. Vendor Terms May Be Negotiable

  • Usually invoices will come with set terms-Net 30, Net 60, 2%10 Net 30, etc.
  • Give you vendors a schedule of when your check runs are so they know when to expect payments.
  • Regardless of the terms given, you can call your vendors and negotiate terms for your own company.
  • Vendors will often give discounts or special terms to customers that purchase large volumes and on a regular basis.
  • Even if the normal terms can’t be changed, if you run into an issue and must pay late, it’s best to call and discuss it with your vendor rather than avoiding them. Follow the phone call up with an email with what was discussed to there is no miscommunication.

4. Reduce CFO Impact to Verification & Signature

  • Typically the CFO signs checks or in the case of small companies, an owner will often sign the checks, but should not be assembling the check run.
  • Accounts Payable should run the aging, choose which invoices to pay, assemble the invoices, print the checks, and verify that all invoices are approved before bringing them to the appropriate party for signature.

Regardless of the size of your company, start managing your accounts payable process more efficiently to save time and money.

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12 Bookkeeping Tips For Your Business

accounting2Bookkeeping is probably not the most exciting part of your day, but it is a crucial component of running your business that cannot be ignored. Whether you hire someone else to do it for you or do it on your own, it needs to be regularly maintained and monitored. By keeping your financial records organized throughout the year you will be able to keep your business focused. Additionally you will be able to assist your accountant when it comes time for the financial year end.


Here are 12 bookkeeping tips to help your business stay on track and flourish:


Find a good bookkeeper

A professional bookkeeper can train you on your software, answer any questions and fix any mistakes that might have been made. Ask for help when it comes to running your business in the best way possible.  Your business can only benefit when your financial affairs are all in order.

Invest in technology

Accounting/bookkeeping software will make it easy to be efficient, accurate and up to date.  More and more business owners are turning toward cloud software and other accounting solutions that allow them and their accountants to access financial information from any electronic device.
Keep personal and business finances separate

Never mix the two, it will make your accounting much more difficult to handle. It’s a lot easier to keep accurate records if there is only one type of account.  There will not be any guessing as to whether it’s a personal or business expense. A lot of time will be saved by keeping these accounts separate.

Plan for major expenditure

Set aside money for major expenses like large stock purchases, office equipment and repairs and maintenance.  By budgeting for these types of expenses, the funds will be available when you are ready not when you can afford it.

Set aside money for taxes

Setting aside money each month towards paying your businesses taxes will mean your ATO obligations will always be met on time.

Keep an eye on your Creditor Invoices

Late and unpaid bills can affect your businesses credit. Keep your bills organized and always pay on time. And if you can’t pay of time, keep an open line of communication with your vendors.

Reconcile bank accounts monthly

It is important to do bank reconciliations for all your bank accounts, credit cards and petty cash.  You will have accurate and up to date information including profit and loss and be able to manage cash flow. Another reason is that it will cut down the amount of time needed by your external accountant in preparing your year-end figures for tax and statutory compliance.

Review your cash flow statement as often as possible

The cash flow for most small businesses is constantly fluctuating, which means it needs to be regularly monitored. If you are using an online bookkeeping software program, it will be easy to generate and review your cash flow statement from anywhere. This way you can avoid insufficient fund charges by researching financing options in advance and making sure all of your debts are covered.

Avoid cash

If cash is used, it is hard to keep track of spending. By using a debit or credit card you can keep track of amount spent, where it was spent and when it was spent. This makes tracking your expenses much, much easier.

Schedule a set time each week to enter all invoices

Make sure that there is a portion of your weekly agenda designated specifically on managing your finances and updating your records. Depending on the volume of invoices you receive, this could be easily accomplished in 30-90 minutes per week, especially if you are using an accounting system with quick entry fields and handy drop-down toolbars.

Regularly check up on your debtors

Make sure you stay on top of your accounts receivable so that you are receiving payments from clients when they are due. Regularly running an accounts receivable report and issuing monthly statements to clients will help you stay on top of monies that you are owed.  It will also assist with your cash flow.

Good filing system
Maintaining a good filing system is imperative in keeping your paperwork organized.  You will always be able to find ‘that piece of paper’ when you need it.  Or go one step further and create an electronic filing system and do away with ‘that piece of paper’ altogether.


By keeping your records in check, you will be able to spend less time on business finances and more time on growing your business. For more information please contact us at

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How to Handle A Returned Check

How to Handle a Returned Check

For most any business, accepting checks is a service to its customers. Unfortunately, banks every so often return checks, and dealing with them can be a frustrating process. If you are the receiver of a bad check, you can take several steps to recover the money you lost on the sale, as well as the fees you incurred from your bank.

Handle the return check on your books:

The first thing you will need to do is record this returned check in your accounting system. You don’t want your accounts receivable and bank account to be misstated.  If you don’t have this item set up already in your QuickBooks you want to create a new item “other charge” for your Item List: Bounced Check.  Leave Amount at zero, tax code as non, and for the Account choose your checking account.  Also create another “other charge” item: Bad Check Charge — no amount, non-tax, and for the account set up an income item named “returned check charge”.  Then create an invoice to your customer using these two items.  Invoice for the amount of the check on item Bounced Check and for the bank charge on the Bad Check charge item. (Include a description of the NSF ck# number, date.)  This will have the effect of backing out the deposit and will match to your bank statement.   When you receive a replacement check from your customer, receive it as you would any other payment.

Now for the handling of the check with your customer:

Do not redeposit the check without first speaking with your customer. This will avoid additional bank fees if the check still isn’t good.  Call your customer. Good people make mistakes too, and giving your customer a call, and letting him know what happened often can solve the problem. Let the customer know the check number and dollar amount, as well as any fees your bank assessed you. The oversight might embarrass many people, and they will want make good on the check and then your problem is resolved.

If you don’t get anywhere after speaking with the customer, send a certified letter. Bad check laws vary from state to state but many State guidelines typically require you to send a certified letter to the check writer asking for payment of funds. Ask for payment to be made by a certified check or money order; request the check writer to pay bank fees you incurred because of the returned check. State law requires the check writer to respond within a certain number of days to your letter. Check with your state before sending the letter.

Place a follow-up call to the check maker. You are within your legal rights to go directly to small claims court if payment is not received. However, if you contact the check writer again and they pay restitution in full, then a court appearance can be avoided. Explain to the check writer that you will file a police report or take them to small claims court if they do not pay what is owed to you.

If none of the above actions are getting you anywhere, notify the police. If the check writer lives in your area, file a complaint with your local police department. You will need to fill out a police report and include copies of the bounced check, your certified letter, related receipts and document your attempts to recover the funds. Ask the police to pursue the check writer and bring forth charges.

Hopefully it will not come to the final step and you are able to recover the payment in full. But if not, it’s good to know there are steps you can take. The events might make you, the company; more cautious of whom you accept check payments from in the future.

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PayPal, How To Use The Account In QuickBooks

Paypal is a great way to send and receive payments, but many aren’t quite sure how it should be set up in their QuickBooks file.  For all intents and purposes, it’s a bank account and it should be treated as such.     

 To set up your new PayPal account you go to your chart of accounts and click the Account button on the bottom of the window and click on New.  Name your account PayPal.


 How exactly does QuickBooks and PayPal work together you ask?  You can manually enter all your PayPal transactions or you can export them from PayPal as an .iif file and import them into QuickBooks



You will also want to set PayPal up as a payment method both on the customer and vendor side.

When you’re recording a payment from your customer you must also record the fees that PayPal charges. PayPal posts the money to your account net, meaning they deposit the funds after they take their fees. There are a couple ways you can post the payment; one way is to post the full amount of the payment and the record the fees as a negative amount when you are making the deposit. The other way is to record the net amount of the payment and “discount” the fee in order for the invoice to be recorded as paid in full. 


If you use your PayPal account to pay your vendors you would process the payment in QuickBooks as if you were paying bills from your checking account. You can assign it a number as if it were a check, I like to put PP for PayPal in place of a number.


You will also need to link your checking account with your PayPal account in order to transfer funds from the PayPal account into your checking. PayPal also has a Debit MasterCard you can request that is linked to the funds that are in your PayPal account; makes purchasing easier and no more waiting for funds to be transferred into your checking account.

Don’t forget to reconcile your PayPal account monthly just like you do your other checking and credit card accounts.

If you need additional information please contact us at



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Accountant vs Bookkeeper

logooAccountant vs Bookkeeper

What is the difference between a bookkeeper and an accountant? A bookkeeper handles the day-in day-out financial record keeping and reporting. An accountant specializes in the preparation and filing of taxes. Having a good bookkeeper is just as important to the growing business as having a good accountant.
Cost is another significant difference between an accountant and a bookkeeper. For this reason it is very important that you allocate your resources accordingly. You do not want to be paying your accountant to perform bookkeeping functions, this will eat up most of your financial services budget.
 Accountants do not have the time to handle day-in day-out financial record keeping and reporting, that’s why they hire bookkeepers.
Bookkeepers perform a critical function for the firms and organizations they serve. Regularly challenged to maintain precise and accurate records, bookkeepers produce the vital reports that keep management up to date on the financial condition of their company.
Bookkeepers are responsible for maintaining the business checkbook. They record routine money transactions like customer payments into a cash receipts journal and checks to vendors into a cash disbursement journal. They also process payroll. At month end they transfer or post the journal totals to the general ledger in preparation for financial statements prepared by the accountant. They prepare monthly quarterly and year end financial statements.
Accountants are responsible for the design and management of the financial systems that bookkeepers use. They prepare tax returns at year end. Accountants may also prepare budgets for management and loan proposals for bankers; they may perform cost analysis for the company’s products or services.
Hiring a bookkeeping service may often be a good solution for the small business owner. A good service will communicate well with your accountant so when tax time rolls around, the accountant will need to spend as little time as possible on your tax return keeping your accountant’s fee to a minimum. Make sure you understand the reports you get back from your service. You want to make the most of the information to make productive decisions for your business.
Both bookkeepers and accountants are important to your business. Knowing the difference between them will not only assure you of receiving the best information on which to base your financial decisions, but will also save you hundreds of dollars per year in fees.

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