Business Garage continues our weekly #toptips for #bookkeeping series. Week two – purchase ledger.
Accounts payable can be just as important for a fledgling business. You do not want to gain a reputation as a bad payer, but equally cash flow can be difficult to manage. Here are some tips to ensure you keep on top of your payments and stay safe against cyber fraud:
- Agree payment terms with your suppliers in advance, so that you will have cash when you need it. Align payment terms for your suppliers with those from your clients.
- Check that the amount due on the invoice tallies, errors are easily made. Reject any invoices that do not match what was agreed.
- Implement a purchase order (PO) system where possible. This allows you to agree from the outset the price and any payment terms.
- Check payment terms – there is no need to pay the invoice before the due date but do try not to miss the due date and incur late payment charges. In worst cases, some vendors may refuse to supply you in future if you are badly overdue with payments.
- Ideally more than one person should approve any outgoing payments to protect against cyber fraud and ensure accuracy of payment.
- Be cautious about unexpected emails requesting payment – either roll your mouse over or hit reply to see the true sender of email (as emails can be disguised).
- Verify all requests for changes to bank details (including internal emails) by contacting the sender by telephone.
The Business Garage bookkeepers are professionally cautious and have meticulous attention to detail. We always use two levels of approval for any outgoing payments, so you can rest assured that your payments are always correct, secure and on time. Find out more here. If you need expert help, contact our team on [email protected] or 01235 433099.