Working with your Corporation Part 7: Accounts Payable & Receivable

In this 7^th part of our blog series on working with your corporation, we will discuss some important things you would need to know about managing your Accounts Payable and Accounts Receivable.

                                                                         

Accounts Payable

Accounts payable is simple, but you do need a tracking system and a filing system.  If you are only going to have a small amount of payables, you do not require a digital tracking system, just a way to ensure your bills are paid on time.  If you have larger amounts of regular accounts payable, you will need a digital tracking system such as Quick Books or other software.  .

Important Note on Accounts Payable: Always do your best to keep current with all vendors to ensure good relationship and good credit.  Whatever your terms are, pay them by the due date.  Also, remember that when you have extended credit terms, such as net 30, you can utilize this credit and pay just before or on the due date and maximize your cash flow!

Accounts Receivable

If your business gets paid when the job gets done, or you are selling a product without credit terms then you may not ever have any Accounts Receivable.  However, most business do end up with some accounts receivable.  Have a way to track your accounts receivable and always collect as soon as possible. Do not let people that owe you money drift off.  Contact them and/or send them statements regularly if need be and ensure you get paid!

Important Note on Accounts Receivable: Uncollected Receivables have closed businesses due to lack of cash flow.  Make it a priority in your business to collect all revenue as soon as possible!

In our next post, part 8 of our blog series, we will discuss Vehicle Operations in detail.  You will know what constitutes vehicle ownership as well as how to keep a mileage log.