Elements Of The Accounting System: Accounts Payable
Whom do you owe? Keep track with the accounts payable ledger.
The accounts payable subledger is similar to that used to track accounts receivable. The difference is that accounts payable occur when you purchase inventory or other assets on credit from a supplier.
It is important to track accounts payable in a timely manner to ensure that you know how much you owe each supplier and when payment is due. Many a good supplier relationship has been damaged due to a sloppy accounts payable system. Also, if your suppliers offer discounts for payment within 10 days of invoice, a good automated accounts payable system will alert you when to pay to maximize the discounts earned.
Excerpted from Start Your Own Business: The Only Start-Up Book You'll Ever Need, by Rieva Lesonsky and the Staff of Entrepreneur Magazine, © 1998 Entrepreneur Press