What is ‘payable to a supplier’? First I would like to define the term ‘supplier’. In practice for some reason it creates some confusion and I have seen often enough some people thinking you sell your goods to your supplier. Whilst this may happen, it’s a case your supplier becomes your client at the same time. ‘Supplier’ is someone you buy goods and/or services from; they supply you with goods and/or services you require. For argument purposes, your ‘customer’ is someone who buys goods and/or services from you. So now that’s clear we can move on.  Continue reading →

When it comes to purchasing, it’s something most companies do at least as often (if not more often) than they sell. I would say that accounting entries for recognizing a purchase take place the most in a company’s books.  Continue reading →

Do you think that supplier invoices are something that can be thrown around and just laying somewhere? Are supplier invoices obsolete once they’re paid? How do you handle them in order to achieve timely payment?

First and foremost, keeping accounting documents (that is all documents you’ve used for your accounting entries within your financial statements) for a certain required period can only be achieved if those documents are not just somewhere, but in a safe place. Normally the period you’re required to retain those documents is measured in years so think about that when choosing this place.  Continue reading →

As it happens, not always your suppliers issue their invoices in time, sometimes invoices get lost in mail and so on. If you have more than just one person making expenses, i.e. buying materials etc., it may happen that the invoices just lay in the back of their drawers somewhere and are at some point forgotten.  Continue reading →

How does one come about treating supplier credits in their accounting? You’ve already accounted for the expense or the asset and now you obtained a credit for it.

The idea behind a credit invoice is usually decreasing the initial amount, hence the word “credit”, however note that the treatment, whether it’s a credit invoice or an additional invoice (that is to increase the expense), the treatment doesn’t really change.  Continue reading →

You have irregular cash flows and as such, you don’t always make the amounts for the due dates. Needless to say that it’s possibly poor cash flow management from your part, but it also begs to question which would make more sense – to pay up partly or wait until you can make a full payment to your supplier.

First things first, I would make it clear with the supplier who is the counterparty why such a situation arises in the first place, if it’s a permanent situation and how do you plan to ensure they will still get the money. It’s not just letting them know, but also agreeing that it’s acceptable for them aswell. It’s about agreeing on the situation and provided you’re interested in the services and / or goods, you do really want to do that.  Continue reading →

In your everyday accounting there are bound to be some expenses on which you need to pay taxes according to your local legislation. Be them taxes on special benefits or VAT on general purchases, it’s important nonetheless to have an overview of the amounts the tax should be calculated on.

If the tax is on special type of expenses, say canteen expenses you pay for your employees, do make sure those expenses are accounted on a separate account so you’d have clear and easy overview of the amount.  Continue reading →