When you choose online accounting services there are two vital services they offer. Accounts receivable and accounts payable services. In this blog, we explain what both mean.
The very first resource of every sales department is accounts receivable. This department is the go-to for sales, accounting, and shipping. This is where all the orders, invoices, labels, picking slips, and more are generated.
What are accounts receivable?
It is the quantity owed to a business by its clients. Every sale made is recorded in an invoice, which could be digital or on paper. The invoice contains:
Besides this, an invoice also has the terms of payment, an invoice number, and the outline of the goods sold. What are the payment terms? They can be the extension date you give to a client or credit terms set by the client. The goal is to give your client or customer enough time to pay the invoice. Typically, this is 30 to 60 days.
Every invoice created by the accounts receivable is considered an asset. You can use them to estimate the worth of a business. Therefore, one of the tasks of the department is to work in tandem with the bookkeeper to develop monthly or quarterly sales reports. These reports contain information on aged accounts or overdue accounts besides other data.
Accounts payable is the amount you owe to your contractors, suppliers, or even individuals. This is typically recorded in a file or ledger account. It is the responsibility of the clerk within the accounts payable services to process all payments, either weekly or monthly. These payments include:
The primary duty of the accounts payable services is to validate and process invoices for payments. That is why they work very closely with the buying or shipping department to expedite supplier invoices.
For instance, your business makes a purchase. A sale order with a unique number and identifier will be generated for it. The order contains the date on which you made it, how many units were bought, the cost of each item, the shipping charges, and the expected arrival date of the shipment.
This sale order is useful in tracking shipments coming into your business. Let’s say the shipment is not received on the expected date. Then you can follow up with the supplier using the sales order through the accounts payable service.
Maintaining accounts payable and receivable accurately is not an easy task, even in a small business. It requires expertise, and it must be completed on time. That is why it is never recommended to tackle accounting services on your own. You will either be distracted from your core business or miss essential tasks required in bookkeeping.
A better and smarter decision is to outsource your accounting services to virtual bookkeepers. As a professional accounting company, we have not only the knowledge for it but also the experience.
But more than that, why waste your precious time on accounts payable and account receivable when someone else can do it at half the cost of a full-time employee!
Get in touch to know how online accounting services make the most of your business.