As a small business owner, you have to keep track of so many things. You will be better off if you know how to prepare accounts payable ageing report using the best online accounting software. Paying your suppliers on time will become that much easier.
What is Accounts Payable Ageing Report?
It is always ‘pressure cooker’ situation for small business owners. And, the details of the goods or services purchased on credit, especially the small items, slips below the subincision level. However, letting it happen could harm your brand image. The suppliers expect you to pay them keeping with the due dates.
This is being able to generate accounts payable ageing report instantly proves useful. It shows amounts your business owe to your suppliers and others. The reports show details about creditors, amounts, and how long you have owed debts.
An accounts payable ageing report also termed as the accounts payable reconciliation, help you visualise amounts you owe. It gives you an opportunity to consider and prioritise your business’ debts carefully.
How To Prepare Aged Accounts Payable Reports
The ageing of accounts payable is a method of listing your debts and other payables according to their due dates. You need to prepare this report often so as not to lag on paying your suppliers. You can automate the task by using accounts payable software.
The format of the chart for AP ageing report is pretty basic. Its first column contains Supplier Name; the second column gives the total amount currently owed to each supplier. Then, come the columns for payment days outstanding;
- Fewer than 30 days
- 31 to 60 days
- 61 to 90 days
- More than 90 days
Why Is Ageing of Accounts Payable Important?
It is given that you have to clear your supplier’s payment on time. Doing so can qualify you for discounts and incentives. On the other hand, you will not have to pay any late fees on delayed payments.
Analysis of aged accounts payable report gives you an insight into the pattern of your business expenses. You can use this info to priorities them and get a firm handle on your cash flow.
How to Use Accounts Payable Ageing Report?
If you want actionable aged accounts payable reports, you need to have the latest financial data. It means a streamlined purchase and accounting system. Here, online accounting software plays an important role.
These systems enable you in minimising data entry and human errors that are not possible with manual workflow. It stores the data in a centralised database and speeds up your data retrieval. You can use it to prepare financial statements and reports like cash flow and accounts receivable ageing report.
When you are using accounts receivable ageing report to pay your debts, you have to be careful with the payment due dates. The credit period and payment terms may differ from supplier to supplier.
And, the due date that you are considering may not be the longest in your system. You need to take into account the early-payment discount or incentive offered by the suppliers before paying your debts.
Transparent accounting information is of value in generating accurate accounts payable ageing report and financial statements. It is a great help to you in making data-driven strategic and planning decisions for your business.
Prepare Financial Reports Accurately Using Accounting Software
You can do all of these tasks only if you have reliable data and streamlined accounting processes. You could ensure it by implementing the accounting system. Tools like OneAccounting Software ensures:
- Auto creation of default company accounts
- Data accuracy and transparency
- Data security using security matrix
- Painless reconciliation of accounts
A recently prepared aged accounts payable report can help you in clearing your supplier’s payment on time. Doing so reduces your business debts and also qualifies you for monetary gains. Surely, you believe in avoiding any late fees.