Minute by minute

my thoughts on making the most out of all of life's minutes…

Word Up Wednesday – Accounts Receivable and Accounts Payable

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Happy Thursday!  Oooops….ran out of time yesterday before I could offer you this week’s word(s).

Accounts Receivable and Accounts Payable.  Two accounting terms that every business person needs to understand.  Both of these show up on the Balance Sheet and help give an overview of your company’s financial standings.

Accounts Receivable is money owed to a business by its clients (customers) and shown on its Balance Sheet as an asset.

Terms of payments depends on  your company, but typically is considered Net 30.  This means  – the debtor (your customer or client) has 30 days from the invoice to pay this debt.  Other payment terms are usually Net 45 and Net 60 (they pay the total balance in 45 or 60 days of invoice).

Beware: You can’t simply apply late payment terms to your invoice.  Check with your state regulations on this (or your attorney or CPA).  For example, in my state (Washington) an employer is unable to place a late fee for more than 12% (no more than 1% a month) in one year.

Accounts Payable:  is the amount owed for the purchase of goods or services at a specific date. Accounts Payable is presented in the Liability section of the Balance Sheet.

 

Try This! Do you use an accounting software program to keep track of your books?  Run a report that says “Balance Sheet”.  On this report  you will notice both A/P and A/R are listed there.  Need help deciphering this report – give me a call.

And if you aren’t using an accounting software – PLEASE – give me a call.

Happy Wednesday – oh wait – Thursday!

~Amy

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Author: amymunns

Finding more minutes in your day. Specializing in time management, goal setting, prioritizing tasks for small business, busy professionals and active families.

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