It’s fairly common, in my experience, to see business owners who use their bookkeeping software to record invoices sent to their customers. That makes sense because NOT sending invoices is the surest way to NOT be paid for your work, and getting paid is pretty much the point of doing business. Yes, we want to contribute to our communities, and provide goods and services that people need or want, and any number of other motivations. But if we don’t get paid, we won’t be doing what we’re doing for very long. So of course, enter your invoices so you can track who owes you money, how much they owe, and how long they have owed it. Look at your Accounts Receivable Aging Report for that information.
But far less common do I see business owners recording the bills they owe in that same software. If you only use the invoice function, your reports only show you part of the picture. They’re missing an important metric, so conclusions drawn from your reports will be faulty.
You need to get the bills YOU owe off your desk and into your bookkeeping software. You can manually enter them one by one as they come in the mail or into your email Inbox. Or you can upload them to an integrated app such as Receipt Bank (my preferred method) that uses some pretty amazing AI to read and capture the information on the bills, and then publish the bills to QuickBooks Online (QBO) or other major bookkeeping software provider.
When you get your bills into QBO:
- You can use your Accounts Payable Aging Report to make sure no bills go unpaid, so you do not incur late fees or penalties. You will also not create ill-will from a vendor who has been unpaid for too long simply because you missed something.
- Your Balance Sheet will show the whole picture (assuming you run your reports using the Accrual method, not Cash — there are radio buttons in QBO so you can toggle back and forth). This is critical if you need to ask a bank for a loan; they want to see on your financial statements how much you already owe before they decide whether or not to lend you more.
- You will be able to manage your cash flow better and make better decisions because you will see not only money coming in that you have not yet received, but also bills you owe that you have not yet paid.
So for the love of your business, use your bookkeeping software to the full extent you can. If you don’t already, start using it to track your Accounts Payable. You’ll be glad you did.