Accounts Payable Bill Payment Reporting

An accounting software system should allow for these two ways to determine which open invoices to pay:

Cash Flow and Aging.

1) Cash Flow Reporting lists open invoices based on selected periodic intervals based on due date cutoffs.  In other words, how much money is obligated to be used to pay invoices in one week, in two weeks, etc.

The report shows if discounts are taken or lost when paid by the cutoff date. Let’s say you are given a two percent discount when paid by a certain date. It will show up on the cash flow report as a savings if within the selected cutoff date and a loss of discount if paid after that cutoff date.

2) The Aging Report ignores discounts. It ignores due dates. Instead, it looks at how long an invoice is unpaid based on the original invoice date. Those who use this method most likely look at the typical thirty day cycle of cash in and out as more important than taking advantage of discounts and when the vendor wants to be paid.

Those who use the Cash Flow Report to decide which invoices are paid are not as concerned with the thirty day cycle but rather take advantage of discounts as well as maintaining a steady cycle of paying bills.

You are looking for someone who understands your business and will help you navigate your needs. It’s your money and business on the line. Give us a call at (773)502-5771 to get you on the right track.

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