Reviewing Accounts Payable
In very much the same way as reviewing our unpaid customers, we are now doing the exact same thing with our unpaid suppliers. If our business usually pays suppliers on time, we shouldn't expect to find too many unpaid balances on our accounts payable reports.
It could be that our business is struggling and cash flow is not great. If that is the case, it would be of no surprise to find that we are late paying suppliers. However, we know from experience that all may not be as it seems, so we must check thoroughly.
Things to consider when reviewing unpaid supplier balances include the following:
- Has the business owner paid the supplier from personal funds?
- Has the transaction list been reviewed against the supplier to check for possible duplications?
- Are all banks fully up to date and reconciled?
- Have any payments been recorded in error?
- An expense recorded instead of a bill payment.
- An incorrect allocation against the wrong supplier...